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Selling Information

Author

Listed:
  • Johannes Horner
  • Andrzej Skrzypacz

Abstract

We characterize optimal selling protocols/equilibria of a game in which an Agent first puts hidden effort to acquire information and then transacts with a Firm that uses this information to take a decision. We determine the equilibrium payoffs that maximize incentives to acquire information. Our analysis is similar to finding ex ante optimal self-enforcing contracts since information sharing, outcomes and transfers cannot be contracted upon. We show when and how selling and transmitting information gradually helps. We also show how mixing/side bets increases the Agent’s payoff. In fact, she can get the entire surplus with rich enough tests.
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Suggested Citation

  • Johannes Horner & Andrzej Skrzypacz, 2013. "Selling Information," Levine's Working Paper Archive 786969000000000680, David K. Levine.
    • Handle: RePEc:cla:levarc:786969000000000680
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • 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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