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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 …
The Demand For Information: More Heat Than Light, Jussi Keppo, Giuseppe Moscarini, Lones Smith
The Demand For Information: More Heat Than Light, Jussi Keppo, Giuseppe Moscarini, Lones Smith
Cowles Foundation Discussion Papers
This paper produces a comprehensive theory of the value of Bayesian information and its static demand. Our key insight is to assume ‘natural units’ corresponding to the sample size of conditionally i.i.d. signals – focusing on the smooth nearby model of the precision of an observation of a Brownian motion with uncertain drift. In a two state world, this produces the heat equation from physics, and leads to a tractable theory. We derive explicit formulas that harmonize the known small and large sample properties of information, and reveal some fundamental properties of demand: (a) Value ‘non-concavity’: The marginal value of …
Monotone Preferences Over Information, Juan Dubra, Federico Echenique
Monotone Preferences Over Information, Juan Dubra, Federico Echenique
Cowles Foundation Discussion Papers
We consider preference relations over information that are monotone: more information is preferred to less. We prove that, if a preference relation on information about an uncountable set of states of nature is monotone, then it is not representable by a utility function.