Buyer-optimal learning and monopoly pricing

Roesler, Anne-Katrin and Szentes, Balázs (2017) Buyer-optimal learning and monopoly pricing. American Economic Review, 107 (7). pp. 2072-2080. ISSN 0002-8282

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Abstract

This paper analyzes a bilateral trade model where the buyer’s valuation for the object is uncertain and she observes only a signal about her valuation. The seller gives a take-it-or-leave-it offer to the buyer. Our goal is to characterize those signal structures which maximize the buyer’s expected payoff. We identify a buyer-optimal signal structure which generates (i) efficient trade and (ii) a unitelastic demand. Furthermore, we show that every other buyer-optimal signal structure yields the same outcome as the one we identify: in particular, the same price

Item Type:	Article
Official URL:	https://www.aeaweb.org/journals/aer
Additional Information:	© 2017 American Economic Association.
Divisions:	Economics
Subjects:	H Social Sciences > HB Economic Theory
Date Deposited:	22 Aug 2017 09:24
Last Modified:	26 Sep 2024 21:00
URI:	http://eprints.lse.ac.uk/id/eprint/84061

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