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You are here: Home Seminars 26.06. Micro Theory Seminar: Balazs Szentes

26.06. Micro Theory Seminar: Balazs Szentes

Micro Theory Seminar with Balazs Szentes (London School of Economics)

Event details
  • Micro Theory Seminar
When Jun 26, 2019
from 16:30 to 17:45
Where Faculty Room
Contact Name Stephan Lauermann
Contact Email
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Learning Before Trading: On the Inefficiency of Ignoring Free Information (joint paper with Doron Ravid and Anne-Katrin Roesler)



This paper analyzes a bilateral trade model where the buyer’s valuation for the object is uncertain and she can privately purchase any signal about her valuation. The seller makes a take-it-or-leave-it offer to the buyer. The cost of a signal is smooth and increasing in informativeness. We characterize the set of equilibria when learning is free and show that they are strongly Pareto ranked. Our main result is that, when learning is costly but the cost of information goes to zero, equilibria converge to the worst free-learning equilibrium. 

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