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What the Seller Wont Tell You: Persuasion and Disclosure in Markets

Author

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  • P. Milgrom

Abstract

Thе paper presents the microeconomic theoretical arguments about how sellers disclose information in an attempt to encourage buyers, and the potential role for regulation in encouraging efficient disclosure of information. The author seeks to understand, when should one expect all the relevant information to be reported. If testing and reporting by the seller are costly, the question is whether too little or too much testing and reporting will be done. The article also studies the types of information withheld by the seller and the corresponding reactions of rational buyers. The problems of social welfare and the government regulations to improve the functioning of markets are also addressed. The theoretical tool proposed by the author is the theory of persuasion games - games in which one or more sellers provide verifiable information to buyers to influence the actions they take.

Suggested Citation

  • P. Milgrom, 2009. "What the Seller Wont Tell You: Persuasion and Disclosure in Markets," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 3.
    • Handle: RePEc:nos:voprec:y:2009:id:851
    DOI: 10.32609/0042-8736-2009-3-94-109
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    JEL classification:

    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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