CFDP 1743R2

Selling Information

Author(s): 

Publication Date: December 2009

Revision Date: November 2012

Pages: 51

Abstract: 

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 surplus.

Keywords: 

Value of information, Dynamic game

JEL Classification Codes:  C72, D82, D83