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Discriminatory Information Disclosure

Author

Listed:
  • Hao Li
  • Xianwen Shi

Abstract

We consider a price discrimination problem in which a seller has a single object for sale to a potential buyer. At the time of contracting, the buyer's private type is his incomplete private information about his value, and the seller can disclose additional private information to the buyer. We study the question of whether discriminatory information disclosure can be profitable to the seller under the assumption that, for the same disclosure policy, the amount of additional private information that the buyer can learn depends on his private type. In both discrete-type and continuous-type setting, we show that discriminatory disclosure can be optimal because, compared to full disclosure, it reduces the information rent accrued to private types of the buyer without much impact on the trade surplus. A complete characterization of the optimal discriminatory disclosure policy is provided in the discrete-type setting. We also establish sufficient conditions for the optimality of full information disclosure in the continuous-type setting.

Suggested Citation

  • Hao Li & Xianwen Shi, 2013. "Discriminatory Information Disclosure," Working Papers tecipa-497, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-497
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    More about this item

    Keywords

    Sequential Screening; Discriminatory Disclosure; Price Discrimination; Dynamic Mechanism Design;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law

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