CFDP 1743R

Selling Information

Author(s): 

Publication Date: December 2009

Revision Date: August 2011

Pages: 58pp, abstract

Abstract: 

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.

Keywords: 

Value of information, Dynamic game

JEL Classification Codes:  C72, D82, D83