Working Paper: CEPR ID: DP16707
Authors: Mikhail Drugov; Levent Celik
Abstract: We study verifiable disclosure by a monopolist when the product has multiple quality attributes. We identify an equilibrium in which the firm discloses a score---the average of the qualities---without revealing any further information. While full unraveling is still an equilibrium, it is dominated by the score equilibrium in terms of ex ante as well as ex post profits. Moreover, it is ``defeated'' by the score equilibrium.
Keywords: monopoly; quality; uncertainty; verifiable information disclosure; multidimensional types
JEL Codes: D82; D83; L12; L15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| score disclosure equilibrium (C70) | higher profits (D33) |
| full disclosure (G18) | lower profits (D33) |
| symmetric disclosure (D82) | higher expected profit (L21) |
| asymmetric disclosure (D82) | lower expected profit (E25) |
| score disclosure (Y10) | balanced good (C78) |
| balanced good (C78) | increased demand (J23) |
| increased demand (J23) | higher profits (D33) |