CFDP 1743

Selling Information

Author(s): 

Publication Date: December 2009

Revision Date: August 2010

Pages: 55

Abstract: 

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.

Keywords: 

Value of information, Dynamic game

JEL Classification Codes:  C72, D82, D83