The Economics of Advice

Winand Emons and Severin Lenhard

No 17840, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A consumer wants to buy one of three different products. An expert observes which of the three products is the best match for the consumer. Under linear prices a monopolistic expert may truthfully reveal, may partially reveal, and may not reveal at all her information. The outcome is inefficient; moreover, the consumer gets some of the surplus. With a two-part tariff the expert truthfully reveals her information. The outcome is efficient and the expert appropriates the entire surplus. If experts are competitive, they also truthfully reveal; here all the surplus goes to consumers.

JEL-codes: D18 D82 (search for similar items in EconPapers)
Date: 2023-01
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Working Paper: The Economics of Advice (2023)
Working Paper: The Economics of Advice (2022)
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