Signalling by bayesian persuasion and pricing strategy

Chen, Y; Zhang, J

Signalling by bayesian persuasion and pricing strategy

Chen, Y

Zhang, J

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Publisher:: Oxford University Press (OUP)
Publication Type:: Journal Article
Citation:: The Economic Journal, 2020, 130, (628), pp. 976-1007
Issue Date:: 2020-05-01

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Field	Value	Language
dc.contributor.author	Chen, Y https://orcid.org/0000-0001-5197-0670
dc.contributor.author	Zhang, J https://orcid.org/0000-0002-7528-3653
dc.date.accessioned	2021-06-02T22:12:29Z
dc.date.available	2021-06-02T22:12:29Z
dc.date.issued	2020-05-01
dc.identifier.citation	The Economic Journal, 2020, 130, (628), pp. 976-1007
dc.identifier.issn	0013-0133
dc.identifier.issn	1468-0297
dc.identifier.uri	http://hdl.handle.net/10453/149377
dc.description.abstract	© 2020 Royal Economic Society. Published by Oxford University Press. All rights reserved. This article investigates how a privately informed seller could signal her type through Bayesian persuasion and pricing strategy. We find that it is generally impossible to achieve separation through one channel alone. Furthermore, the outcome that survives the intuitive criterion always exists and is unique. This outcome is separating, for which a closed-form solution is provided. The signalling concern forces the high-type seller to disclose inefficiently more information and charge a higher price, resulting in fewer sales and lower profit. Finally, we show that a regulation on minimal quality could potentially hurt social welfare, and private information hurts the seller.
dc.language	en
dc.publisher	Oxford University Press (OUP)
dc.relation.ispartof	The Economic Journal
dc.relation.isbasedon	10.1093/ej/ueaa002
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	14 Economics
dc.subject.classification	Economics
dc.title	Signalling by bayesian persuasion and pricing strategy
dc.type	Journal Article
utslib.citation.volume	130
utslib.for	14 Economics
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	closed_access	*
pubs.consider-herdc	true
dc.date.updated	2021-06-02T22:12:27Z
pubs.issue	628
pubs.publication-status	Published
pubs.volume	130
utslib.citation.issue	628

Abstract:

© 2020 Royal Economic Society. Published by Oxford University Press. All rights reserved. This article investigates how a privately informed seller could signal her type through Bayesian persuasion and pricing strategy. We find that it is generally impossible to achieve separation through one channel alone. Furthermore, the outcome that survives the intuitive criterion always exists and is unique. This outcome is separating, for which a closed-form solution is provided. The signalling concern forces the high-type seller to disclose inefficiently more information and charge a higher price, resulting in fewer sales and lower profit. Finally, we show that a regulation on minimal quality could potentially hurt social welfare, and private information hurts the seller.

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http://hdl.handle.net/10453/149377