Disclosure and Pricing of Attributes

Abstract

A monopolist sells an object characterized by multiple attributes. A buyer can be one of many types, differing in their willingness to pay for each attribute. The seller can provide arbitrary attribute information in the form of a statistical experiment. To screen different types, the seller offers a menu of options that specify information prices, experiments, and object prices.

I characterize revenue-maximizing menus. All experiments belong to a class of linear disclosure policies. An optimal menu may be nondiscriminatory and qualitatively depends on the structure of buyer heterogeneity. The analysis informs on the benefits of partial disclosure in pricing settings.

Keywords: advertising, attributes, call options, demand transformation, information design, intermediaries, linear disclosure, mechanism design, multidimensional screening, persuasion

JEL Classification: D11, D42, D82, D83, L15