IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2607.19558.html

Profiling and Endogenous Valuation

Author

Listed:
  • Anh Nguyen
  • Teck Yong Tan

Abstract

We study a monopolist facing a buyer whose valuation is determined by pre-trade investment. Before setting price, the seller observes a signal about the buyer's private investment cost (buyer profiling). Information that helps the seller extract surplus can also undermine the buyer's incentive to create it. We characterize the buyer-seller payoffs attainable across all possible profiling. On the Pareto frontier, if investment increases, hold-up risk always raises the payoff that the seller captures faster than the surplus that the investment creates. Protecting buyer welfare therefore requires discouraging investment, even though investment is socially efficient.

Suggested Citation

  • Anh Nguyen & Teck Yong Tan, 2026. "Profiling and Endogenous Valuation," Papers 2607.19558, arXiv.org.
    • Handle: RePEc:arx:papers:2607.19558
    as

    Download full text from publisher

    File URL: https://arxiv.org/pdf/2607.19558
    File Function: Latest version
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2607.19558. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: https://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.