CFDP 1952

Selling Experiments: Menu Pricing of Information

Author(s): 

Publication Date: July 2014

Pages: 34

Abstract: 

A monopolist sells informative experiments to heterogeneous buyers. Buyers differ in their prior information, and hence in their willingness to pay for additional signals. The monopolist can profitably offer a menu of experiments. We show that, even under costless information acquisition and free degrading of information, the optimal menu is quite coarse. The seller offers at most two experiments, and we derive conditions under which at vs. discriminatory pricing is optimal.

Keywords: 

Experiments, Mechanism design, Price discrimination, Product differentiation, Selling information