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Informed seller with taste heterogeneity

Author

Listed:
  • Frédéric Koessler

    (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Vassiliki Skreta

    (UCL - University College of London [London])

Abstract

Consider a seller with a single indivisible good facing a buyer whose willingness to pay depends on his privately-known taste and on product characteristics privately known by the seller. What selling procedure can arise as an equilibrium of the game in which the seller strategically chooses mechanisms conditional on his information? We characterize the set of equilibrium outcomes and establish that ex-ante revenue-maximizing mechanisms are in this set. There is generally a continuum of revenue-ranked equilibrium outcomes. Focusing on the revenue-maximizing equilibrium, we show that the seller, in general, benefits from private information and does not benefit from committing to a disclosure or a certification technology. We also provide conditions under which the privacy of the seller's information does not affect revenue.

Suggested Citation

  • Frédéric Koessler & Vassiliki Skreta, 2016. "Informed seller with taste heterogeneity," Post-Print halshs-01379293, HAL.
    • Handle: RePEc:hal:journl:halshs-01379293
    DOI: 10.1016/j.jet.2016.06.004
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Onur A. Koska & Frank Stähler, 2022. "Reserve Prices as Signals," Working Papers in Economics 22/10, University of Canterbury, Department of Economics and Finance.
    2. Koessler, Frederic & Skreta, Vasiliki, 2019. "Selling with evidence," Theoretical Economics, Econometric Society, vol. 14(2), May.
    3. Anastasios Dosis, 2022. "On the informed principal model with common values," RAND Journal of Economics, RAND Corporation, vol. 53(4), pages 792-825, December.
    4. Nishimura, Takeshi, 2022. "Informed principal problems in bilateral trading," Journal of Economic Theory, Elsevier, vol. 204(C).
    5. Ian Jewitt & Daniel Z. Li, 2017. "Cheap Talk Advertising in Auctions: Horizontally vs Vertically Differentiated Products," Working Papers 2017_03, Durham University Business School.
    6. Dirk Bergemann & Alessandro Bonatti & Alex Smolin, 2018. "The Design and Price of Information," American Economic Review, American Economic Association, vol. 108(1), pages 1-48, January.
    7. Takeshi Nishimura, 2019. "Informed Principal Problems in Bilateral Trading," Papers 1906.10311, arXiv.org, revised Feb 2022.
    8. Yamashita, Takuro, 2018. "Optimal Public Information Disclosure by Mechanism Designer," TSE Working Papers 18-936, Toulouse School of Economics (TSE).

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    More about this item

    Keywords

    Mechanism design; Product information disclosure; Value of information; Informed seller; Consumer heterogeneity;
    All these keywords.

    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

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