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Sources of consumer information

Author

Listed:
  • Frédéric Koessler

    (GREGHEC - Groupement de Recherche et d'Etudes en Gestion - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique, HEC Paris - Ecole des Hautes Etudes Commerciales)

  • Régis Renault

    (THEMA - Théorie économique, modélisation et applications - CNRS - Centre National de la Recherche Scientifique - CY - CY Cergy Paris Université, CY - CY Cergy Paris Université)

Abstract

A buyer can learn about a product either by acquiring information or through product information disclosed by the seller. We characterize optimal disclosure and pricing, and show how they depend on consumer information costs and on the seller's ability to fine-tune disclosure. Optimal disclosure always deters further information acquisition. Lower information costs increase consumer surplus and reduce profit under optimal disclosure, whereas their effect on market outcomes is ambiguous when the seller cannot provide information. Comparing optimal disclosure with no disclosure, we draw implications for platform design and for how product-information environments shape profits and consumer welfare.

Suggested Citation

  • Frédéric Koessler & Régis Renault, 2023. "Sources of consumer information," Working Papers halshs-04846073, HAL.
    • Handle: RePEc:hal:wpaper:halshs-04846073
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04846073v4
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    File URL: https://shs.hal.science/halshs-04846073v4/document
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    Keywords

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    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • 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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