How Informed Do You Want Your Principal To Be?
Speaker: Prof Rahul Deb
Affiliation: University of Toronto
Online via Zoom: https://uqz.zoom.us/j/82603079317
Abstract
We study a bilateral trade setting with interdependent values and two-sided private information. A buyer's value for a good depends both on his privately known type and the quality that he does not observe. The cost of the seller also depends on both the buyer's type and the quality; she learns about the latter via a (noisy) private signal whose realization is the seller’s private information. How much (if any) private information would the buyer want the seller to have? We answer this question by characterizing the buyer-optimal outcome: this is the information structure and the corresponding seller-optimal equilibrium of the informed principal game that yields the highest consumer surplus. We derive conditions under which private information for the seller benefits the buyer; typically, the highest consumer surplus is obtained when the seller's signal is noisy but informative. Conversely, the seller may not benefit from having private information.
About the presenter's meeting
If you would like to meet with Prof Deb, please contact Dr Carlos Oyarzun
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