Price discrimination through communication

Artikel

We study a seller's optimal mechanism for maximizing revenue when a buyer may present evidence relevant to her value. We show that a condition very close to transparency of buyer segments is necessary and sufficient for the optimal mechanism to be deterministic--hence akin to classic third degree price discrimination--independently of non-evidence characteristics. We also find another sufficient condition depending on both evidence and valuations, whose content is that evidence is hierarchical. When these conditions are violated, the optimal mechanism contains a mixture of second and third degree price discrimination, where the former is implemented via sale of lotteries. We interpret such randomization in terms of the probability of negotiation breakdown in a bargaining protocol whose sequential equilibrium implements the optimal mechanism.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: Theoretical Economics ; ISSN: 1555-7561 ; Volume: 10 ; Year: 2015 ; Issue: 2 ; Pages: 597-648 ; New Haven, CT: The Econometric Society

Classification and Topics

• Classification: Wirtschaft ; Bargaining Theory; Matching Theory ; Asymmetric and Private Information; Mechanism Design ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
• Subject: Price discrimination ; communication ; bargaining ; commitment ; evidence ; network flows

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Sher, Itai ; Vohra, Rakesh
• Event: Veröffentlichung
• (who): The Econometric Society
• (where): New Haven, CT
• (when): 2015

Further information

• DOI: doi:10.3982/TE1129
• Handle: http://hdl.handle.net/10419/150258
• Last update: 10.03.2025, 11:44 AM CET