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Optimal Information Disclosure

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  • Luis Rayo
  • Ilya Segal
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    Abstract

    A sender randomly draws a “prospect” characterized by its profitability to the sender and its relevance to a receiver. The receiver observes only a signal provided by the sender and accepts the prospect if his Bayesian inference about the prospect’s relevance exceeds his opportunity cost. The sender’s profits are typically maximized by partial information disclosure, whereby the receiver is induced to accept less relevant but more profitable prospects (“switches”) by pooling them with more relevant but less profitable ones (“baits”). Extensions include maximizing a weighted sum of sender profits and receiver surplus and allowing the sender to use monetary incentives.

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    File URL: http://www.jstor.org/stable/full/10.1086/657922
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    Bibliographic Info

    Article provided by University of Chicago Press in its journal Journal of Political Economy.

    Volume (Year): 118 (2010)
    Issue (Month): 5 ()
    Pages: 949 - 987

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    Handle: RePEc:ucp:jpolec:doi:10.1086/657922

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    Web page: http://www.journals.uchicago.edu/JPE/

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    Cited by:
    1. Koessler, Frédéric & Renault, Régis, 2012. "When Does a Firm Disclose Product Information?," Economics Papers from University Paris Dauphine 123456789/12406, Paris Dauphine University.
    2. Florian Hoffmann & Roman Inderst & Marco Ottaviani, 2013. "Hypertargeting, Limited Attention, and Privacy: Implications for Marketing and Campaigning," Working Papers 479, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    3. White, Alexander, 2013. "Search engines: Left side quality versus right side profits," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 690-701.
    4. Anton Kolotilin, 2013. "Experimental Design to Persuade," Discussion Papers 2013-17, School of Economics, The University of New South Wales.
    5. Dirk Bergemann & Alessandro Bonatti, 2014. "Selling Cookies," Levine's Working Paper Archive 786969000000000909, David K. Levine.
    6. Andrey Fradkin, 2012. "Do Online Marketplaces Become More Efficient Over Time?," Working Papers 12-24, NET Institute.
    7. Bouvard, Matthieu & Levy, Raphael, 2013. "Two-sided reputation in certification markets," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 446, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    8. Edelman, Benjamin & Gilchrist, Duncan S., 2012. "Advertising disclosures: Measuring labeling alternatives in internet search engines," Information Economics and Policy, Elsevier, vol. 24(1), pages 75-89.
    9. Anton Kolotilin, 2013. "Optimal Information Disclosure: Quantity vs. Quality," Discussion Papers 2013-19, School of Economics, The University of New South Wales.
    10. Kfir Eliaz & Roberto Serrano, 2014. "Sending information to interactive receivers playing a generalized prisoners’ dilemma," International Journal of Game Theory, Springer, vol. 43(2), pages 245-267, May.
    11. Mehmet Ekmekci & Nenad Kos, 2014. "Value of Information and Fairness Opinions in Takeovers," Working Papers 510, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.

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