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Screening with Persuasion

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  • Dirk Bergemann
  • Tibor Heumann
  • Stephen Morris

Abstract

We consider a general nonlinear pricing environment with private information. The seller can control both the signal that the buyers receive about their value and the selling mechanism. We characterize the optimal menu and information structure that jointly maximize the seller's profits. The optimal screening mechanism has finitely many items even with a continuum of values. We identify sufficient conditions under which the optimal mechanism has a single item. Thus the seller decreases the variety of items below the efficient level as a by-product of reducing the information rents of the buyer.

Suggested Citation

  • Dirk Bergemann & Tibor Heumann & Stephen Morris, 2022. "Screening with Persuasion," Papers 2212.03360, arXiv.org.
    • Handle: RePEc:arx:papers:2212.03360
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    Cited by:

    1. Dirk Bergemann & Tibor Heumann & Stephen Morris, 2022. "Screening with Persuasion," Papers 2212.03360, arXiv.org.
    2. Andreas Haupt & Zoe Hitzig, 2023. "Opaque Contracts," Papers 2301.13404, arXiv.org.

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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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