Disclosure and Pricing of Attributes

Smolin, Alex (2019): Disclosure and Pricing of Attributes.

Abstract

A monopolist sells an object characterized by multiple attributes. A buyer can be one of many types, differing in their willingness to pay for each attribute. The seller can disclose to the buyer arbitrary attribute information in the form of a statistical experiment. The seller decides how to price the object, what information to disclose, and how to price access to the information. To screen different types, the seller offers a menu of options that specify information prices, experiments, and object prices.

I characterize revenue-maximizing menus. If all types value the same attribute, then the seller cannot benefit from information disclosure and price discrimination. More generally, if each type values a single attribute and attributes are independent, then the seller can benefit from information disclosure but not from price discrimination. In other cases, a discriminatory menu can be profitable; however, optimal experiments always belong to a tractable class of linear disclosure policies. The analysis informs the operation of various intermediaries including business brokers and online recruiting platforms.

• Item Type: MPRA Paper
• Language: English
• Keywords: attributes, call options, demand transformation, information design, intermediaries, linear disclosure, mechanism design, multidimensional screening, persuasion
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D11 - Consumer Economics: Theory; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D42 - Monopoly; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information ; Mechanism Design; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search ; Learning ; Information and Knowledge ; Communication ; Belief ; Unawareness; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L15 - Information and Product Quality ; Standardization and Compatibility

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