Selling Information

Horner, Johannes; Skrzypacz, Andrzej

doi:10.2139/ssrn.2181551

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Selling Information

Cowles Foundation Discussion Paper No. 1743RR

52 Pages Posted: 28 Nov 2012

See all articles by Johannes Horner

Andrzej Skrzypacz

Stanford University - Stanford Graduate School of Business

There are 3 versions of this paper

Date Written: November 11, 2012

Abstract

An Agent who owns information that is potentially valuable to a Firm bargains for its sale, without commitment and certification possibilities, short of disclosing it. We propose a model of gradual persuasion and show how gradualism helps mitigate the hold-up problem (that the Firm would not pay once it learns the information). An example illustrates how it is optimal to give away part of the information at the beginning of the bargaining, and sell the remainder in dribs and drabs. The Agent can only appropriate part of the value of information. Introducing a third-party allows her to extract the maximum surplus.

Keywords: Value of information, Dynamic game

JEL Classification: C72, D82, D83

Suggested Citation: Suggested Citation

Horner, Johannes and Skrzypacz, Andrzej, Selling Information (November 11, 2012). Cowles Foundation Discussion Paper No. 1743RR, Available at SSRN: https://ssrn.com/abstract=2181551 or http://dx.doi.org/10.2139/ssrn.2181551