Screening with Persuasion

Dirk Bergemann, Tibor Heumann and Stephen Morris

No 2338, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We consider a general nonlinear pricing environment with private information. We characterize the information structure that maximizes the seller’s profits. The seller who cannot observe the buyer’s willingness to pay can control both the signal that a buyer receives about his value and the selling mechanism. The optimal screening mechanism has finitely many items even with a continuum of types. We identify sufficient conditions under which the optimal mechanism has a single item. Thus, the socially efficient variety of items is decreased drastically at the expense of higher revenue and lower information rents.

Keywords: Nonlinear Pricing; Finite Menu; Second-degree Price Discrimination; Recommender System (search for similar items in EconPapers)
JEL-codes: D44 D47 D83 D84 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2022-07
New Economics Papers: this item is included in nep-com, nep-des, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Screening with Persuasion (2025)
Working Paper: Screening with Persuasion (2023)
Working Paper: Screening with Persuasion (2023)
Working Paper: Screening with Persuasion (2022)
Working Paper: Screening with Persuasion (2022)
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