IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/2032.html

Strategic Pricing, Signalling and Costly Information Acquisition

Author

Listed:
  • Bester, Helmut
  • Ritzberger, Klaus

Abstract

Consider a market where an informed monopolist sets the price for a good or asset with a value unknown to potential buyers. Upon observing the price, buyers may pay some cost for information about the value before deciding on purchases. To restrict buyer beliefs we generalize the idea of the Cho-Kreps 'intuitive criterion'. Then there is no separating equilibrium with fully revealing prices. Yet, as the cost of information acquisition becomes small, the equilibrium approaches the full information outcome and prices become perfectly revealing.

Suggested Citation

  • Bester, Helmut & Ritzberger, Klaus, 1998. "Strategic Pricing, Signalling and Costly Information Acquisition," CEPR Discussion Papers 2032, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2032
    as

    Download full text from publisher

    File URL: http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=2032
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mamada, Robert, 2022. "The market for lemons and information theory," Mathematical Social Sciences, Elsevier, vol. 120(C), pages 107-112.
    2. Helmut Bester & Juri Demuth, 2015. "Signalling Rivalry and Quality Uncertainty in a Duopoly," Journal of Industry, Competition and Trade, Springer, vol. 15(2), pages 135-154, June.
    3. Helmut Bester & Matthias Lang & Jianpei Li, 2021. "Signaling versus Auditing," RAND Journal of Economics, RAND Corporation, vol. 52(4), pages 859-883, December.
    4. Tamer Boyaci & Yalçin Akçay, 2016. "Pricing when customers have limited attention," ESMT Research Working Papers ESMT-16-01, ESMT European School of Management and Technology, revised 19 Jan 2017.
    5. Mark Voorneveld & Jörgen W. Weibull, 2011. "A Scent of Lemon—Seller Meets Buyer with a Noisy Quality Observation," Games, MDPI, vol. 2(1), pages 1-24, March.
    6. Adriani, Fabrizio & Deidda, Luca G., 2009. "Price signaling and the strategic benefits of price rigidities," Games and Economic Behavior, Elsevier, vol. 67(2), pages 335-350, November.
    7. Martin, Daniel, 2017. "Strategic pricing with rational inattention to quality," Games and Economic Behavior, Elsevier, vol. 104(C), pages 131-145.
    8. Peter Achim & Bojia Li & Lily Ling Yang, 2025. "Endorsements and Referrals: Product Recommendations in Bilateral Trade," CRC TR 224 Discussion Paper Series crctr224_2025_657, University of Bonn and University of Mannheim, Germany.
    9. Thomas Liebi, 2003. "The Demand for Tests," Diskussionsschriften dp0307, Universitaet Bern, Departement Volkswirtschaft.
    10. Tamer Boyac? & Yalçın Akçay, 2018. "Pricing When Customers Have Limited Attention," Management Science, INFORMS, vol. 67(7), pages 2995-3014, July.
    11. Bilancini, Ennio & Boncinelli, Leonardo, 2018. "Signaling with costly acquisition of signals," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 141-150.
    12. Mehmet Ekmekci & Nenad Kos, 2020. "Signaling Covertly Acquired Information," Working Papers 658, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    13. Bester, Helmut & Lang, Matthias & Li, Jianpei, 2018. "Signaling versus costly information acquisition," Discussion Papers 2018/11, Free University Berlin, School of Business & Economics.
    14. Silvia Martinez-Gorricho, 2020. "Signalling, Information and Consumer Fraud," Games, MDPI, vol. 11(3), pages 1-25, July.
    15. Silvia Martínez-Gorricho, 2012. "Beneficial consumer fraud," Working Papers. Serie AD 2012-13, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    16. Gertz, Christopher, 2016. "Quality Uncertainty with Imperfect Information Acquisition," Center for Mathematical Economics Working Papers 487, Center for Mathematical Economics, Bielefeld University.
    17. Ekmekci, Mehmet & Kos, Nenad, 2023. "Signaling covertly acquired information," Journal of Economic Theory, Elsevier, vol. 214(C).
    18. Figueroa, Nicolás & Guadalupi, Carla, 2021. "Testing the sender: When signaling is not enough," Journal of Economic Theory, Elsevier, vol. 197(C).
    19. Gertz, Christopher, 2016. "A Model of Quality Uncertainty with a Continuum of Quality Levels," Center for Mathematical Economics Working Papers 522, Center for Mathematical Economics, Bielefeld University.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

    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:cpr:ceprdp:2032. 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: the person in charge (email available below). General contact details of provider: https://www.cepr.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.