Competitive Information Disclosure in Search Markets

Board, Simon; Lu, Jay

doi:10.1086/699211

Cited by 72 publications

(26 citation statements)

References 29 publications

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“…Some other papers in that literature that bear mentioning are Au and Kawai (2017a,b), Albrecht (2017), Boleslavsky and Cotton (2018) and Board and Lu (2018). The result that competition encourages information disclosure is familiar from some of these, but introducing attention costs offers a novel perspective on why that might be true.…”

Section: Related Literaturementioning

confidence: 99%

Competing to Persuade a Rationally Inattentive Agent

Jain

Whitmeyer

2019

SSRN Journal

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Firms strategically disclose product information in order to attract consumers, but recipients often find it costly to process all of it, especially when products have complex features. We study a model of competitive information disclosure by two senders, in which the receiver may garble each sender's experiment, subject to a cost increasing in the informativeness of the garbling. As long as attention costs are not too low, there is an interval of prior means over which it is an equilibrium for both senders to offer full information, which interval expands as attention costs grow. Information on one sender substitutes for information on the other, which allows the receiver to nullify the profitability of a deviation. We thus provide a novel channel through which competition encourages information disclosure.

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Section: Related Literaturementioning

confidence: 99%

Competing to Persuade a Rationally Inattentive Agent

Jain

Whitmeyer

2019

SSRN Journal

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“…While our focus is on buyer-optimal information structures, another strand of literature on information design studies seller-optimal information structures for various selling environments (see, e.g., Lewis and Sappington, 1994;Bergemann and Pesendorfer, 2007;Eső and Szentes, 2007;Board and Lu, 2018). The buyer in our model has no private information at the outset, and to maximize the social surplus, he should always get the object.…”

Section: Introductionmentioning

confidence: 99%

Buyer-Optimal Robust Information Structures

Terstiege

Wasser

2018

SSRN Journal

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“…For example, the more buyers revisit a seller's web site, the more likely it reflects their intensified search from finding a lower price somewhere else (Peters 2015). The number of web sites that a buyer has visited can also reflect how well a buyer is informed about the products in the market (Board and Lu, 2015). This requires a new competition theory that shows how firms incorporate buyers' market information in determining their terms of trade and how it affects equilibrium outcomes.…”

Section: Introductionmentioning

confidence: 99%

“…The set of a seller's (symmetric) equilibrium payoffs in this competing mechanism game, denoted by Φ e J ,, is shown to be a connected interval between the lower bound and upper bound. 2 The lower bound is the minmax value of a seller's expected profit with respect to DIC direct mechanisms and the upper bound is the expected profit achieved by the joint profit maximization. In addition, any profit in Φ e J can be supported in an equilibrium where a message set for a buyer in a seller's contract has only two messages (one and zero).…”

Section: Introductionmentioning

confidence: 99%

Neutralized Competition

Han

2018

SSRN Journal

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This paper proposes a tractable competing mechanism game where each seller simultaneously posts a trading contract that specifies a menu of dominant strategy incentive compatible (DIC) direct mechanisms conditional on an array of messages sent by buyers, and each seller subsequently chooses a DIC direct mechanism from his menu. The complete set of a seller's profits that are supportable in a (symmetric) equilibrium is the interval between the minmax value of his profit with respect to DIC direct mechanisms and his profit in the joint profit maximization. The set of a seller's equilibrium profits is robust to the possibility of a seller's deviation to any arbitrary mechanism in the standard environment with linear utilities and independent private type. Further, with no limited liability or with no capacity constraints, the set of a seller's equilibrium profits coincides with the set of his feasible (i.e., individually rational and incentive compatible) profits. Given a number of buyers, the number of sellers can be endogenized and is equal to the largest number at which a seller's profit in the joint profit maximization is non-negative: As the number of buyers increases, competition is neutralized because only the monopoly terms of trade prevails in the market, whereas the range of a seller's equilibrium profits shrinks to his reservation profit.

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Competitive Information Disclosure in Search Markets

Cited by 72 publications

References 29 publications

Competing to Persuade a Rationally Inattentive Agent

Competing to Persuade a Rationally Inattentive Agent

Buyer-Optimal Robust Information Structures

Neutralized Competition

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