Information Design in Bilateral Trade and (Unintended) Welfare Loss
Research output: Conference Papers (RGC: 31A, 31B, 32, 33) › 32_Refereed conference paper (without host publication) › peer-review
Author(s)
Related Research Unit(s)
Detail(s)
Original language | English |
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Number of pages | 28 |
Publication status | Published - Jun 2021 |
Conference
Title | 2021 North American Summer Meeting of the Econometric Society (NASMES 2021) |
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Location | Virtual |
Place | Canada |
City | Montreal |
Period | 10 - 13 June 2021 |
Link(s)
Permanent Link | https://scholars.cityu.edu.hk/en/publications/publication(fdec6a64-6e81-4be4-8c93-669324c17027).html |
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Abstract
This paper studies the impact of third-party information design on bilateral trade. A seller sets the price of a product and makes a take-it-or-leave-it oer to a buyer. A third-party information designer, who maximizes a weighted social welfare, observes the seller's pricing strategy and designs the information structure of a signal about the value of the product. The buyer observes the price, the information structure and the signal realization and decides whether to purchase the product. I characterize the set of equilibria and show that, due to the strategic interaction between the seller and the designer, third-party information design can cause a Pareto inferior outcome despite the designer's aim to maximize a weighted social welfare.
Bibliographic Note
Information for this record is supplemented by the author(s) concerned.
Citation Format(s)
Information Design in Bilateral Trade and (Unintended) Welfare Loss. / Xu, Wenji; Yang, Kai Hao.
2021. Paper presented at 2021 North American Summer Meeting of the Econometric Society (NASMES 2021), Montreal, Quebec, Canada.
2021. Paper presented at 2021 North American Summer Meeting of the Econometric Society (NASMES 2021), Montreal, Quebec, Canada.
Research output: Conference Papers (RGC: 31A, 31B, 32, 33) › 32_Refereed conference paper (without host publication) › peer-review