Sources of consumer information

Frederic Koessler and Régis Renault ()
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Régis Renault: THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université, CY - CY Cergy Paris Université

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Abstract: A buyer can learn about a product either by acquiring information or through product information disclosed by the seller. We characterize optimal disclosure and pricing, and show how they depend on consumer information costs and on the seller's ability to fine-tune disclosure. Optimal disclosure always deters further information acquisition. Lower information costs increase consumer surplus and reduce profit under optimal disclosure, whereas their effect on market outcomes is ambiguous when the seller cannot provide information. Comparing optimal disclosure with no disclosure, we draw implications for platform design and for how product-information environments shape profits and consumer welfare.

Keywords: information disclosure; information acquisition; advertising; search (search for similar items in EconPapers)
Date: 2023-03-01
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04846073v4
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Working Paper: Sources of Consumer Information (2025)
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