Discussion paper

DP17898 Screening with Persuasion

We consider a general nonlinear pricing environment with private information. The seller can control both the signal that the buyers receive about their value and the selling mechanism. We characterize the optimal menu and information structure that jointly maximize the seller's profits. The optimal screening mechanism has finitely many items even with a continuum of values. We identify sufficient conditions under which the optimal mechanism has a single item. Thus, the socially efficient variety of items is decreased drastically at the expense of higher revenue and lower information rents.


Bergemann, D, T Heumann and S Morris (2023), ‘DP17898 Screening with Persuasion‘, CEPR Discussion Paper No. 17898. CEPR Press, Paris & London. https://cepr.org/publications/dp17898