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Optimal Information Design of Online Marketplaces with Return Rights

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  • Jonas von Wangenheim

Abstract

Consumer data increasingly enable online marketplaces to identify buyers’ preferences and provide individualized product information. Buyers, however, fully learn their product value only after contracting, when the product is delivered. I characterize the impact of such ex-ante information on buyer surplus and seller surplus, when the seller sets prices and refund conditions in response to the ex-ante information. I show that efficient trade and an arbitrary split of the surplus can be achieved. For the buyer- optimal signal low-valuation buyers remain partially uninformed. Such a signal induces the seller to sell at low prices without refund options.

Suggested Citation

  • Jonas von Wangenheim, 2022. "Optimal Information Design of Online Marketplaces with Return Rights," CRC TR 224 Discussion Paper Series crctr224_2022_352v2, University of Bonn and University of Mannheim, Germany, revised Apr 2024.
    • Handle: RePEc:bon:boncrc:crctr224_2022_352v2
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    References listed on IDEAS

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    More about this item

    Keywords

    information disclosure; sequential screening; information design; strategic learning; Bayesian persuasion; mechanism design; platform economics; consumer protection;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection

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