Selling Experiments: Menu Pricing of Information

35 Pages Posted: 16 Jul 2014

See all articles by Dirk Bergemann

Dirk Bergemann

Yale University - Cowles Foundation - Department of Economics; Yale University - Cowles Foundation

Alessandro Bonatti

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Alex Smolin

University of Bonn

Date Written: July 14, 2014

Abstract

A monopolist sells informative experiments to heterogeneous buyers. Buyers differ in their prior information, and hence in their willingness to pay for additional signals. The monopolist can profitably offer a menu of experiments. We show that, even under costless information acquisition and free degrading of information, the optimal menu is quite coarse. The seller offers at most two experiments, and we derive conditions under which at vs. discriminatory pricing is optimal.

Keywords: Experiments, Mechanism design, Price discrimination, Product differentiation, Selling information

Suggested Citation

Bergemann, Dirk and Bonatti, Alessandro and Smolin, Alex, Selling Experiments: Menu Pricing of Information (July 14, 2014). Cowles Foundation Discussion Paper No. 1952. Available at SSRN: https://ssrn.com/abstract=2465960 or http://dx.doi.org/10.2139/ssrn.2465960

Dirk Bergemann (Contact Author)

Yale University - Cowles Foundation - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States
203-432-3592 (Phone)
203-432-2128 (Fax)

HOME PAGE: http://www.econ.yale.edu/~dirk/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Alessandro Bonatti

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Alex Smolin

University of Bonn ( email )

37 Lennestr.
Bonn, ‎North Rhine-Westphalia 53113
Germany

HOME PAGE: http://sites.google.com/site/alexeyvsmolin/

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