Monopolistic signal provision

Luis Rayo*

*Corresponding author for this work

Research output: Contribution to journalReview articlepeer-review

12 Scopus citations

Abstract

I study a monopolist who sells a signal to a consumer with a hidden type. The consumer uses this signal to obtain social status, defined as the expectation of the consumer's type conditional on the signal. The monopolist must decide how accurately different types are revealed. When pooling subsets of types, she reduces social surplus, but extracts greater information rents. I derive the optimal mechanism by examining the covariance between the consumer's type and his virtual marginal value of social status.

Original languageEnglish (US)
Pages (from-to)27-58
Number of pages32
JournalB.E. Journal of Theoretical Economics
Volume13
Issue number1
DOIs
StatePublished - May 8 2013

Keywords

  • information disclosure
  • nonlinear pricing
  • signaling

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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