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Prof. Vasiliki Skreta

University College London, United Kingdom

Authors: Frédéric Koessler and Vasiliki Skreta

Abstract: How should a seller optimally sell his good to a buyer whose willingness to pay depends  on his privately-known taste and on product characteristics privately known by the seller?  The optimum is characterized by a mediated selling protocol and is sometimes implementable by bilateral face-to-face cheap talk after which the seller asks a price conditional on the conversation. Ex-ante, the seller benefits from private information and does not benefit from committing to a disclosure or a certification technology. Ex-ante revenue- maximizing mechanisms are equilibria of this informed seller game, but other equilibria exist. Sufficient conditions under which the privacy of the seller’s information does not increase his revenue are provided.

Keywords: Informed seller; consumer heterogeneity; product information disclosure; mechanism design; value of information.

JEL Classification: C72; D82.

Full Text:  “Informed Seller with Taste Heterogeneity”