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Optimal Information Design of Online Marketplaces with Return Rights

Author

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  • Jonas von Wangenheim

Abstract

Customer data enables online marketplaces to identify buyers’ preferences and provide individualized product information. Buyers learn their product value only after contracting when the product is delivered. I characterize the impact of such ex-ante information on buyer surplus and seller surplus, when the seller sets prices and refund conditions in response to the ex-ante information. I show that efficient trade and an arbitrary split of the surplus can be achieved. For the buyer-optimal signal low-valuation buyers remain partially uninformed. Such a signal induces sellers to sell at low prices without refund options, resulting in commonly observed practices of opaque sales.

Suggested Citation

  • Jonas von Wangenheim, 2022. "Optimal Information Design of Online Marketplaces with Return Rights," CRC TR 224 Discussion Paper Series crctr224_2022_352, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2022_352
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp352
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    More about this item

    Keywords

    information disclosure; sequential screening; information design; strategic learning; Bayesian persuasion; mechanism design; platform economics; consumer protection;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection

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