Correlation-Savvy Sellers

Roland Strausz

No 347, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: A multi-product monopolist sells sequentially to a buyer who privately learns his valuations. Using big data, the monopolist learns the intertemporal correlation of the buyer’s valuations. Perfect price discrimination is generally unattainable—even when the seller learns the correlation perfectly, has full commitment, and in the limit where the consumption good about which the buyer has ex ante private information becomes insignificant. This impossibility is due to informational externalities which re- quires information rents for the buyer’s later consumption. These rents induce upward and downward distortions, violating the generalized no distortion at the top principle of dynamic mechanism design.

JEL-codes: D82 L52 (search for similar items in EconPapers)
Date: 2022-11-10
New Economics Papers: this item is included in nep-com, nep-des, nep-gth, nep-mic and nep-reg
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Related works:
Journal Article: Correlation‐savvy sellers (2024)
Working Paper: Correlation-Savvy Sellers (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:347

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