Buyer-optimal learning and monopoly pricing

Anne-Katrin Roesler and Balázs Szentes

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper analyzes a bilateral trade model where the buyer’s valuation for the object is uncertain and she observes only a signal about her valuation. The seller gives a take-it-or-leave-it offer to the buyer. Our goal is to characterize those signal structures which maximize the buyer’s expected payoff. We identify a buyer-optimal signal structure which generates (i) efficient trade and (ii) a unitelastic demand. Furthermore, we show that every other buyer-optimal signal structure yields the same outcome as the one we identify: in particular, the same price

JEL-codes: J1 (search for similar items in EconPapers)
Date: 2017-07-01
New Economics Papers: this item is included in nep-com and nep-mic
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Citations: View citations in EconPapers (84)

Published in American Economic Review, 1, July, 2017, 107(7), pp. 2072-2080. ISSN: 0002-8282

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Related works:
Journal Article: Buyer-Optimal Learning and Monopoly Pricing (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:84061

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