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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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Identification Number: 10.1257/aer.20160145

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
Sets: Departments > Economics
Date Deposited: 22 Aug 2017 09:24
Last Modified: 20 Jul 2019 02:35
URI: http://eprints.lse.ac.uk/id/eprint/84061

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