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Monopolistic signal provision

Rayo, Luis (2013) Monopolistic signal provision. The B.E. Journal of Theoretical Economics, 13 (1). pp. 27-58. ISSN 2194-6124

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Identification Number: 10.1515/bejte-2012-0003


I study a monopolist who sells a signal to a consumer with a hidden type. The consumer uses this signal to obtain social status, defined as the expectation of the consumer’s type conditional on the signal. The monopolist must decide how accurately different types are revealed. When pooling subsets of types, she reduces social surplus, but extracts greater information rents. I derive the optimal mechanism by examining the covariance between the consumer’s type and his virtual marginal value of social status.

Item Type: Article
Official URL:
Additional Information: © 2013 by Walter de Gruyter
Divisions: Management
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HF Commerce
Date Deposited: 01 Aug 2013 12:15
Last Modified: 11 Jun 2024 21:06
Funders: University of Chicago Booth School of Business, University of Utah David Eccles School of Business, LSE Department of Management

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