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- Publisher Website: 10.1086/717350
- Scopus: eid_2-s2.0-85113779457
- WOS: WOS:000731703900001
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Article: Learning before Trading: On the Inefficiency of Ignoring Free Information
Title | Learning before Trading: On the Inefficiency of Ignoring Free Information |
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Authors | |
Issue Date | 2022 |
Citation | Journal of Political Economy, 2022, v. 130, n. 2, p. 346-387 How to Cite? |
Abstract | This paper analyzes a bilateral trade model in which 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 informative-ness. 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. |
Persistent Identifier | http://hdl.handle.net/10722/329735 |
ISSN | 2023 Impact Factor: 6.9 2023 SCImago Journal Rankings: 18.530 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Ravid, Doron | - |
dc.contributor.author | Roesler, Anne Katrin | - |
dc.contributor.author | Szentes, Balázs | - |
dc.date.accessioned | 2023-08-09T03:34:57Z | - |
dc.date.available | 2023-08-09T03:34:57Z | - |
dc.date.issued | 2022 | - |
dc.identifier.citation | Journal of Political Economy, 2022, v. 130, n. 2, p. 346-387 | - |
dc.identifier.issn | 0022-3808 | - |
dc.identifier.uri | http://hdl.handle.net/10722/329735 | - |
dc.description.abstract | This paper analyzes a bilateral trade model in which 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 informative-ness. 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. | - |
dc.language | eng | - |
dc.relation.ispartof | Journal of Political Economy | - |
dc.title | Learning before Trading: On the Inefficiency of Ignoring Free Information | - |
dc.type | Article | - |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1086/717350 | - |
dc.identifier.scopus | eid_2-s2.0-85113779457 | - |
dc.identifier.volume | 130 | - |
dc.identifier.issue | 2 | - |
dc.identifier.spage | 346 | - |
dc.identifier.epage | 387 | - |
dc.identifier.eissn | 1537-534X | - |
dc.identifier.isi | WOS:000731703900001 | - |