Wei, Dong and Green, Brett
Reverse Price discrimination with information design - American Economic Journal: Microeconomics - 16(2). May, 2024: p.267-295
A seller markets a good to a customer whose willingness to pay depends on his private type and the good's quality. The seller designs a screening mechanism that specifies both transfers and information revealed about quality. We show that the optimal mechanism can be implemented by a menu of price-experiment pairs, featuring both price discrimination and information discrimination: buyers with higher private types face lower prices and receive less discerning positive signals. Moreover, we demonstrate the complementarity between these two forms of discrimination. Information design facilitates surplus creation on the extensive margin, but causes surplus destruction on the intensive margin.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mic.20220242
Screening mechanism, Price discrimination, Information discrimination, Private type, Product quality, Transfer design, Optimal mechanism, Menu design, Buyer incentives, Signal design, Surplus creation, Surplus destruction, Extensive margin, Intensive margin, Information design, Economic modeling, Mechanism design, Consumer behavior, Strategic pricing, Market segmentation
Reverse Price discrimination with information design - American Economic Journal: Microeconomics - 16(2). May, 2024: p.267-295
A seller markets a good to a customer whose willingness to pay depends on his private type and the good's quality. The seller designs a screening mechanism that specifies both transfers and information revealed about quality. We show that the optimal mechanism can be implemented by a menu of price-experiment pairs, featuring both price discrimination and information discrimination: buyers with higher private types face lower prices and receive less discerning positive signals. Moreover, we demonstrate the complementarity between these two forms of discrimination. Information design facilitates surplus creation on the extensive margin, but causes surplus destruction on the intensive margin.- Reproduced
https://www.aeaweb.org/articles?id=10.1257/mic.20220242
Screening mechanism, Price discrimination, Information discrimination, Private type, Product quality, Transfer design, Optimal mechanism, Menu design, Buyer incentives, Signal design, Surplus creation, Surplus destruction, Extensive margin, Intensive margin, Information design, Economic modeling, Mechanism design, Consumer behavior, Strategic pricing, Market segmentation