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Consumer-Optimal Information Design

Jonas von Wangenheim
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Jonas von Wangenheim: Humboldt University Berlin

No 53, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: In many trade environments - such as online markets - buyers fully learn their valuation for goods only after contracting. I characterize the buyer-optimal ex-ante information in such environments. Employing a classical sequential screening framework, I find that buyers prefer to remain partially uninformed, since such an information structure induces the seller to set low prices. For the optimal information signal, trade is efficient, and the seller only extracts the static monopoly profit. Further, I fully characterize all possible surplus divisions that can arise in sequential screening for a given prior.

Keywords: information disclosure; sequential screening; strategic learning; bayesian persuasion; mechanism design (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-des and nep-mic
Date: 2017-11-02
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