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How to Sell Hard Information

Author

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  • S Nageeb Ali
  • Nima Haghpanah
  • Xiao Lin
  • Ron Siegel

Abstract

The seller of an asset has the option to buy hard information about the value of the asset from an intermediary. The seller can then disclose this information before selling the asset in a competitive market. We study how the intermediary designs and sells hard information to robustly maximize the intermediary's revenue across all equilibria. Even though the intermediary could use an accurate test that reveals the asset’s value, we show that robust revenue maximization leads to a noisy test with a continuum of possible scores. In addition, the intermediary always charges the seller for disclosing the test score to the market, but not necessarily for running the test. This enables the intermediary to robustly appropriate a significant share of the surplus resulting from the asset sale.

Suggested Citation

  • S Nageeb Ali & Nima Haghpanah & Xiao Lin & Ron Siegel, 2022. "How to Sell Hard Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(1), pages 619-678.
    • Handle: RePEc:oup:qjecon:v:137:y:2022:i:1:p:619-678.
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    File URL: http://hdl.handle.net/10.1093/qje/qjab024
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    Cited by:

    1. Andreas A. Haupt & Nicole Immorlica & Brendan Lucier, 2023. "Certification Design for a Competitive Market," Papers 2301.13449, arXiv.org.
    2. Biswas, Sonny, 2023. "Collateral and bank screening as complements: A spillover effect," Journal of Economic Theory, Elsevier, vol. 212(C).
    3. Teddy Mekonnen & Zeky Murra-Anton & Bobak Pakzad-Hurson, 2023. "Persuaded Search," Papers 2303.13409, arXiv.org, revised Oct 2023.
    4. Itay P. Fainmesser & Andrea Galeotti & Ruslan Momot, 2023. "Digital Privacy," Management Science, INFORMS, vol. 69(6), pages 3157-3173, June.

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