Yale University - Cowles Foundation
Stanford Graduate School of Business
August 12, 2010
Cowles Foundation Discussion Paper No. 1743
We study a dynamic buyer-seller problem in which the good is information and there are no property rights. The potential buyer is reluctant to pay for information whose value to him is uncertain, but the seller cannot credibly convey its value to the buyer without disclosing the information itself. Information comes as divisible hard evidence. We show how and why the seller can appropriate a substantial fraction of the value through gradual revelation, and how the entire value can be extracted with the help of a mediator.
Number of Pages in PDF File: 56
Keywords: Value of information, Dynamic game
JEL Classification: C72, D82, D83
Date posted: December 26, 2009 ; Last revised: August 14, 2010
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