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Consumer-Optimal Information Design

Author

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  • von Wangenheim, Jonas

    (Humboldt University Berlin)

Abstract

In many trade environments - such as online markets - buyers fully learn their valuation for goods only after contracting. I characterize the buyer-optimal ex-ante information in such environments. Employing a classical sequential screening framework, I find that buyers prefer to remain partially uninformed, since such an information structure induces the seller to set low prices. For the optimal information signal, trade is efficient, and the seller only extracts the static monopoly profit. Further, I fully characterize all possible surplus divisions that can arise in sequential screening for a given prior.

Suggested Citation

  • von Wangenheim, Jonas, 2017. "Consumer-Optimal Information Design," Rationality and Competition Discussion Paper Series 53, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:53
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    References listed on IDEAS

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    Cited by:

    1. Toomas Hinnosaar & Keiichi Kawai, 2020. "Robust pricing with refunds," RAND Journal of Economics, RAND Corporation, vol. 51(4), pages 1014-1036, December.

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    More about this item

    Keywords

    information disclosure; sequential screening; strategic learning; bayesian persuasion; mechanism design;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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