Buyer-Optimal Learning and Monopoly Pricing ∗

@inproceedings{Roesler2017BuyerOptimalLA,
  title={Buyer-Optimal Learning and Monopoly Pricing ∗},
  author={A. W. Roesler and Bal{\'a}zs Szentes},
  year={2017}
}
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-orleave-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) effi cient trade and (ii) a unit-elastic demand. Furthermore, we show that every other buyer-optimal signal structure yields the… CONTINUE READING
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