Sales Talk

40 Pages Posted: 13 Jul 2014

See all articles by Frederic Koessler

Frederic Koessler

Paris School of Economics (PSE)

Vasiliki Skreta

University of Texas at Austin - Department of Economics; University College London

Date Written: July 11, 2014

Abstract

How should a seller optimally sell his good to a buyer whose willingness to pay depends on his privately-known taste and on product characteristics privately known by the seller? The optimum is characterized by a mediated selling protocol and is sometimes implementable by bilateral face-to-face cheap talk after which the seller asks a price conditional on the conversation. Posted prices without cheap talk are suboptimal. The seller benefits ex-ante from private information and never benefits from committing to a disclosure or a certification technology. Ex-ante revenue-maximizing mechanisms are equilibria of this informed seller game and coincide with core mechanisms.

Keywords: Informed seller; consumer heterogeneity; product information disclosure; mechanism design; value of information

JEL Classification: C72; D82

Suggested Citation

Koessler, Frederic and Skreta, Vasiliki, Sales Talk (July 11, 2014). Available at SSRN: https://ssrn.com/abstract=2465174 or http://dx.doi.org/10.2139/ssrn.2465174

Frederic Koessler

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Vasiliki Skreta (Contact Author)

University of Texas at Austin - Department of Economics ( email )

Austin, TX 78712
United States

HOME PAGE: http://vskreta.wixsite.com/vskreta

University College London ( email )

Gower Street
London, WC1E 6BT
United Kingdom

HOME PAGE: http://vskreta.wixsite.com/vskreta

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