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Full-Text Articles in Social and Behavioral Sciences
Selling Information, Johannes Hörner, Andrzej Skrzypacz
Selling Information, Johannes Hörner, Andrzej Skrzypacz
Cowles Foundation Discussion Papers
We characterize optimal selling protocols/equilibria of a game in which an Agent first puts hidden effort to acquire information and then transacts with a Firm that uses this information to take a decision. We determine the equilibrium payoffs that maximize incentives to acquire information. Our analysis is similar to finding ex ante optimal self-enforcing contracts since information sharing, outcomes and transfers cannot be contracted upon. We show when and how selling and transmitting information gradually helps. We also show how mixing/side bets increases the Agent’s incentives.
Selling Information, Johannes Hörner, Andrzej Skrzypacz
Selling Information, Johannes Hörner, Andrzej Skrzypacz
Cowles Foundation Discussion Papers
We study a dynamic buyer-seller problem in which the good is information and there are no property rights. The potential buyer is reluctant to pay for information whose value to him is uncertain, but the seller cannot credibly convey its value to the buyer without disclosing the information itself. Information comes as divisible hard evidence. We show how and why the seller can appropriate a substantial fraction of the value through gradual revelation, and how the entire value can be extracted with the help of a mediator.
Selling Information, Johannes Hörner, Andrzej Skrzypacz
Selling Information, Johannes Hörner, Andrzej Skrzypacz
Cowles Foundation Discussion Papers
An Agent who owns information that is potentially valuable to a Firm bargains for its sale, without commitment and certification possibilities, short of disclosing it. We propose a model of gradual persuasion and show how gradualism helps mitigate the hold-up problem (that the Firm would not pay once it learns the information). An example illustrates how it is optimal to give away part of the information at the beginning of the bargaining, and sell the remainder in dribs and drabs. The Agent can only appropriate part of the value of information. Introducing a third-party allows her to extract the maximum …