Working Paper: CEPR ID: DP17963
Authors: Shota Ichihashi; Alex Smolin
Abstract: A monopoly seller is privately and imperfectly informed about the buyer's value of the product. The seller uses information to price discriminate the buyer. A designer offers a mechanism that provides the seller with additional information based on the seller’s report about her type. We establish the impossibility of screening for welfare purposes—i.e., the designer can attain any implementable combination of buyer surplus and seller profit by providing the same signal to all seller types. We use this result to characterize the set of implementable welfare outcomes, study the seller’s incentive to acquire third-party data, and demonstrate the trade-off between buyer surplus and efficiency.
Keywords: Bayesian Persuasion
JEL Codes: D42; D82; D83
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Seller's private information (Y70) | Ability to implement efficient outcomes (D61) |
| Data provision (C81) | Trade-off between consumer protection and efficiency (D18) |
| Seller's type (D44) | Pricing strategies (D49) |
| Pricing strategies (D49) | Buyer surplus (D44) |
| Seller's private information (Y70) | Set of implementable welfare outcomes (D69) |
| Third-party data acquisition (O36) | Set of implementable outcomes (D78) |
| Third-party data acquisition (O36) | Pareto frontier (D61) |
| Seller's private information (Y70) | Pricing strategies (D49) |