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Title: Multi-Dimensional Screening: Buyer-Optimal Learning and Informational Robustness

Author(s): Rahul Deb and Anne-Katrin Roesler

Publication Date: May 2021

Keyword(s):

Programme Area(s): Industrial Organization and Organizational Economics

Abstract: A monopolist seller of multiple goods screens a buyer whose type is initially unknown to both but drawn from a commonly known distribution. The buyer privately learns about his type via a signal. We derive the seller's optimal mechanism in two different information environments. We begin by deriving the buyer-optimal outcome. Here, an information designer first selects a signal, and then the seller chooses an optimal mechanism in response; the designer's objective is to maximize consumer surplus. Then, we derive the optimal informationally robust mechanism. In this case, the seller first chooses the mechanism, and then nature picks the signal that minimizes the seller's profits. We derive the relation between both problems and show that the optimal mechanism in both cases takes the form of pure bundling.

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Bibliographic Reference

Deb, R and Roesler, A. 2021. 'Multi-Dimensional Screening: Buyer-Optimal Learning and Informational Robustness'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=16206