Selling Information

Horner, Johannes; Skrzypacz, Andrzej

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Selling Information

Cowles Foundation Discussion Paper No. 1743R

59 Pages Posted: 1 Jun 2011 Last revised: 20 Aug 2011

See all articles by Johannes Horner

Andrzej Skrzypacz

Stanford University - Stanford Graduate School of Business

There are 3 versions of this paper

Date Written: May 26, 2011

Abstract

We characterize optimal selling protocols/equilibria of a game in which an Agent first puts hidden effort to acquire information and then transacts with a Firm that uses this information to take a decision. We determine the equilibrium payoffs that maximize incentives to acquire information. Our analysis is similar to finding ex ante optimal self-enforcing contracts since information sharing, outcomes and transfers cannot be contracted upon. We show when and how selling and transmitting information gradually helps. We also show how mixing/side bets increases the Agent's incentives.

Keywords: Value of information, Dynamic game

JEL Classification: C72, D82, D83

Suggested Citation: Suggested Citation

Horner, Johannes and Skrzypacz, Andrzej, Selling Information (May 26, 2011). Cowles Foundation Discussion Paper No. 1743R, Available at SSRN: https://ssrn.com/abstract=1856514