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Screening with Persuasion

Author

Listed:
  • Dirk Bergemann
  • Tibor Heumann
  • Stephen Morris

Abstract

We analyze a nonlinear pricing model where the seller controls both product pricing (screening) and buyer information about their own values (persuasion). We prove that the optimal mechanism always consists of finitely many signals and items, even with a continuum of buyer values. The seller optimally pools buyer values and reduces product variety to minimize informational rents. We show that value pooling is optimal even for finite value distributions if their entropy exceeds a critical threshold. We also provide sufficient conditions under which the optimal menu restricts offering to a single item.

Suggested Citation

  • Dirk Bergemann & Tibor Heumann & Stephen Morris, 2026. "Screening with Persuasion," Journal of Political Economy, University of Chicago Press, vol. 134(2), pages 570-625.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/738342
    DOI: 10.1086/738342
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    Cited by:

    1. is not listed on IDEAS
    2. Laura Doval & Alex Smolin, 2025. "Calibrated Mechanism Design," Papers 2512.17858, arXiv.org, revised Feb 2026.
    3. Andreas Haupt & Zoe Hitzig, 2023. "Opaque Contracts," Papers 2301.13404, arXiv.org.
    4. Pietro Dall'Ara & Elia Sartori, 2026. "Screening in digital monopolies," Papers 2602.13014, arXiv.org, revised Mar 2026.
    5. Dirk Bergemann & Tibor Heumann & Stephen Morris, 2026. "Screening with Persuasion," Journal of Political Economy, University of Chicago Press, vol. 134(2), pages 570-625.
    6. Panagiotis Kyriazis & Edmund Lou, 2026. "Information Intermediaries in Monopolistic Screening," Papers 2604.09343, arXiv.org.

    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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