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Pricing, Learning, and Strategic Behavior in a Single-Sale Model

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Abstract

This paper analyzes an infinite horizon model where a seller, who owns an indivisible unit of a good for sale, has incomplete information about the state of the world that determines not only the demand she faces but also her own valuation for the good. Over time, she randomly meets potential buyers who may have incentives to strategically manipulate her learning process. The Perfect Bayesian Equilibria of the game are characterized, as well as some interesting limit properties when agents become almost infinitely patient. Comparative static results regarding the incentives to experiment are presented, and the expected number of periods until the seller trades is calculated.

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  • Hector Chade & Virginia Vera de Serio, "undated". "Pricing, Learning, and Strategic Behavior in a Single-Sale Model," Working Papers 2132863, Department of Economics, W. P. Carey School of Business, Arizona State University.
    • Handle: RePEc:asu:wpaper:2132863
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    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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