IDEAS home Printed from https://ideas.repec.org/a/aea/aecrev/v107y2017i7p2072-80.html
   My bibliography  Save this article

Buyer-Optimal Learning and Monopoly Pricing

Author

Listed:
  • Anne-Katrin Roesler
  • Balázs Szentes

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 unit-elastic 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.

Suggested Citation

  • Anne-Katrin Roesler & Balázs Szentes, 2017. "Buyer-Optimal Learning and Monopoly Pricing," American Economic Review, American Economic Association, vol. 107(7), pages 2072-2080, July.
    • Handle: RePEc:aea:aecrev:v:107:y:2017:i:7:p:2072-80
    Note: DOI: 10.1257/aer.20160145
    as

    Download full text from publisher

    File URL: https://www.aeaweb.org/articles?id=10.1257/aer.20160145
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/attachments?retrieve=07Ahe-keezLPo09AO3omKUIrQGhEp26W
    Download Restriction: no
    File URL: https://www.aeaweb.org/articles/attachments?retrieve=Feur_DDO1ZmYsX5wou8sBE2-MRchsaIy
    Download Restriction: Access to full text is restricted to AEA members and institutional subscribers.
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2015. "The Limits of Price Discrimination," American Economic Review, American Economic Association, vol. 105(3), pages 921-957, March.
    2. Bergemann, Dirk & Pesendorfer, Martin, 2007. "Information structures in optimal auctions," Journal of Economic Theory, Elsevier, vol. 137(1), pages 580-609, November.
    3. Nicola Persico, 2000. "Information Acquisition in Auctions," Econometrica, Econometric Society, vol. 68(1), pages 135-148, January.
    4. Olivier Compte & Philippe Jehiel, 2007. "Auctions and information acquisition: sealed bid or dynamic formats?," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 355-372, June.
    5. Shi, Xianwen, 2012. "Optimal auctions with information acquisition," Games and Economic Behavior, Elsevier, vol. 74(2), pages 666-686.
    6. Mas-Colell, Andreu & Whinston, Michael D. & Green, Jerry R., 1995. "Microeconomic Theory," OUP Catalogue, Oxford University Press, number 9780195102680.
    7. Juan-José Ganuza, 2004. "Ignorance Promotes Competition: An Auction Model of Endogenous Private Valuations," RAND Journal of Economics, The RAND Corporation, vol. 35(3), pages 583-598, Autumn.
    8. Juan-JosÈ Ganuza & JosÈ S. Penalva, 2010. "Signal Orderings Based on Dispersion and the Supply of Private Information in Auctions," Econometrica, Econometric Society, vol. 78(3), pages 1007-1030, May.
    9. Anke Kessler, 1998. "The Value of Ignorance," RAND Journal of Economics, The RAND Corporation, vol. 29(2), pages 339-354, Summer.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Nikandrova, Arina & Pancs, Romans, 2017. "Conjugate information disclosure in an auction with learning," Journal of Economic Theory, Elsevier, vol. 171(C), pages 174-212.
    2. Szech, Nora, 2011. "Optimal disclosure of costly information packages in auctions," Journal of Mathematical Economics, Elsevier, vol. 47(4-5), pages 462-469.
    3. Schweizer, Nikolaus & Szech, Nora, 2017. "Revenues and welfare in auctions with information release," Journal of Economic Theory, Elsevier, vol. 170(C), pages 86-111.
    4. Jeffrey Mensch & Doron Ravid, 2022. "Monopoly, Product Quality, and Flexible Learning," Papers 2202.09985, arXiv.org, revised Jun 2024.
    5. Bing Ye & Sanxi Li, 2018. "Competitive contracts with productive information gathering," Journal of Economics, Springer, vol. 124(1), pages 1-17, May.
    6. Vasilis Syrgkanis & David Kempe & Eva Tardos, 2019. "Information Asymmetries in Common-Value Auctions with Discrete Signals," Management Science, INFORMS, vol. 44(4), pages 1450-1476, November.
    7. Shi, Xianwen, 2012. "Optimal auctions with information acquisition," Games and Economic Behavior, Elsevier, vol. 74(2), pages 666-686.
    8. Hagedorn, Marcus, 2009. "The value of information for auctioneers," Journal of Economic Theory, Elsevier, vol. 144(5), pages 2197-2208, September.
    9. Ganuza, Juan-José & Penalva, Jose, 2019. "Information disclosure in optimal auctions," International Journal of Industrial Organization, Elsevier, vol. 63(C), pages 460-479.
    10. Marschak, Thomas & Shanthikumar, J. George & Zhou, Junjie, 2017. "Does more information-gathering effort raise or lower the average quantity produced?," Journal of Mathematical Economics, Elsevier, vol. 69(C), pages 104-117.
    11. Dirk Bergemann & Stephen Morris, 2019. "Information Design: A Unified Perspective," Journal of Economic Literature, American Economic Association, vol. 57(1), pages 44-95, March.
    12. Roesler, Anne-Katrin & Deb, Rahul, 2021. "Multi-Dimensional Screening: Buyer-Optimal Learning and Informational Robustness," CEPR Discussion Papers 16206, C.E.P.R. Discussion Papers.
    13. Terstiege, Stefan, 2013. "Precontractual Investigation and Sequential Screening," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 429, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    14. Juan-José Ganuza & José S. Penalva, 2005. "On Information and Competition in Private Value Auctions," Working Papers 158, Barcelona School of Economics.
    15. Antonio Cabrales & Olivier Gossner & Roberto Serrano, 2013. "Entropy and the Value of Information for Investors," American Economic Review, American Economic Association, vol. 103(1), pages 360-377, February.
    16. Chen, Yan & He, YingHua, 2021. "Information acquisition and provision in school choice: An experimental study," Journal of Economic Theory, Elsevier, vol. 197(C).
    17. Hao Li & Xianwen Shi, 2017. "Discriminatory Information Disclosure," American Economic Review, American Economic Association, vol. 107(11), pages 3363-3385, November.
    18. Li, Yunan, 2019. "Efficient mechanisms with information acquisition," Journal of Economic Theory, Elsevier, vol. 182(C), pages 279-328.
    19. Peter Eso & Balazs Szentes, 2003. "The One Who Controls the Information Appropriates Its Rents," Discussion Papers 1369, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    20. Vitali Gretschko & Alexander Rajko, 2015. "Excess information acquisition in auctions," Experimental Economics, Springer;Economic Science Association, vol. 18(3), pages 335-355, September.

    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:aecrev:v:107:y:2017:i:7:p:2072-80. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.