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Dynamic Pricing of Information: Belief Divergence and Surplus Extraction

Author

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  • Chia-Hui Chen
  • Junichiro Ishida
  • Wing Suen

Abstract

We consider a screening problem in which a data seller offers a dynamic payment schedule for a sequence of experiments to a privately informed buyer. Different buyer types face different expected costs for the same payment schedule. This payment gap can be optimized to reduce information rent. Dynamic mechanisms strictly increase seller revenue compared to the optimal static mechanism, and may even extract full surplus under some conditions. We obtain a full characterization of optimal dynamic mechanisms, which can take the simple form of a binary experiment at each stage. Payments are backloaded and experiments become progressively more informative over stages.

Suggested Citation

  • Chia-Hui Chen & Junichiro Ishida & Wing Suen, 2025. "Dynamic Pricing of Information: Belief Divergence and Surplus Extraction," ISER Discussion Paper 1294, Institute of Social and Economic Research, The University of Osaka.
    • Handle: RePEc:dpr:wpaper:1294
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