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Buyer-Optimal Robust Information Structures

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  • Stefan Terstiege
  • Cédric Wasser

Abstract

We study buyer-optimal information structures under monopoly pricing. The information structure determines how well the buyer learns his valuation and affects, via the induced distribution of posterior valuations, the price charged by the seller. Motivated by the regulation of product information, we assume that the seller can disclose more if the learning is imperfect. Robust information structures prevent such disclosure, which is a constraint in the design problem. Our main result identifies a two-parameter class of information structures that implements every implementable buyer payoff. An upper bound on the buyer payoff where the social surplus is maximized and the seller obtains just her perfect-information payoff is attainable with some, but not all priors. When this bound is not attainable, optimal information structures can result in an inefficient allocation.

Suggested Citation

  • Stefan Terstiege & Cédric Wasser, 2018. "Buyer-Optimal Robust Information Structures," CRC TR 224 Discussion Paper Series crctr224_2018_034, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2018_034
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    References listed on IDEAS

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    Cited by:

    1. Perez-Richet, Eduardo & Vigier, Adrien & Bizzotto, Jacopo, 2019. "Information Design with Agency," CEPR Discussion Papers 13868, C.E.P.R. Discussion Papers.
    2. Yi-Chun Chen & Xiangqian Yang, 2020. "Information Design in Optimal Auctions," Papers 2010.08990, arXiv.org, revised Oct 2022.
    3. Chen, Yi-Chun & Yang, Xiangqian, 2023. "Information design in optimal auctions," Journal of Economic Theory, Elsevier, vol. 212(C).
    4. Eduardo Perez‐Richet & Vasiliki Skreta, 2022. "Test Design Under Falsification," Econometrica, Econometric Society, vol. 90(3), pages 1109-1142, May.
    5. Navin Kartik & Weijie Zhong, 2023. "Lemonade from Lemons: Information Design and Adverse Selection," Papers 2305.02994, arXiv.org.
    6. Anton Kolotilin & Roberto Corrao & Alexander Wolitzky, 2022. "Persuasion with Non-Linear Preferences," Papers 2206.09164, arXiv.org, revised Aug 2022.
    7. von Wangenheim, Jonas, 2018. "Persuasion Against Self-Control Problems," Rationality and Competition Discussion Paper Series 98, CRC TRR 190 Rationality and Competition.
    8. Jonas von Wangenheim, 2022. "Optimal Information Design of Online Marketplaces with Return Rights," CRC TR 224 Discussion Paper Series crctr224_2022_352v2, University of Bonn and University of Mannheim, Germany, revised Apr 2024.
    9. Terstiege, Stefan & Wasser, Cédric, 2023. "Experiments versus distributions of posteriors," Mathematical Social Sciences, Elsevier, vol. 125(C), pages 58-60.

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    More about this item

    Keywords

    information design; monopoly; regulation;
    All these keywords.

    JEL classification:

    • 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
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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