Selling with Evidence

37 Pages Posted: 22 May 2017

See all articles by Frédéric Koessler

Frédéric Koessler

University of Cergy-Pontoise - THEMA

Vasiliki Skreta

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

Date Written: May 2017

Abstract

We study how to optimally sell a good in a bilateral asymmetric information monopoly setting with interdependent values when the informed seller can voluntarily and costlessly provide evidence about the good's characteristics. Equilibrium allocations are feasible and immune to deviations to any mechanism. We show that there is an ex-ante profit-maximizing selling procedure that is an equilibrium of the mechanism-proposal game. In contrast to posted price settings, information unravelling of product characteristics may fail even when all buyer types agree on the ranking of product quality.

Keywords: Informed principal; consumer heterogeneity; interdependent valuations; product information disclosure; mechanism design; certification

JEL Classification: C72, D82

Suggested Citation

Koessler, Frédéric and Skreta, Vasiliki, Selling with Evidence (May 2017). CEPR Discussion Paper No. DP12049. Available at SSRN: https://ssrn.com/abstract=2971910

Frédéric Koessler (Contact Author)

University of Cergy-Pontoise - THEMA ( email )

33 boulevard du port
F-95011 Cergy-Pontoise Cedex, 95011
France

Vasiliki Skreta

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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