Title

Selling Information

Document Type

Discussion Paper

Publication Date

12-1-2009

CFDP Number

1743R2

CFDP Revision Date

2012-11-01

CFDP Pages

51

Abstract

An Agent who owns information that is potentially valuable to a Firm bargains for its sale, without commitment and certification possibilities, short of disclosing it. We propose a model of gradual persuasion and show how gradualism helps mitigate the hold-up problem (that the Firm would not pay once it learns the information). An example illustrates how it is optimal to give away part of the information at the beginning of the bargaining, and sell the remainder in dribs and drabs. The Agent can only appropriate part of the value of information. Introducing a third-party allows her to extract the maximum surplus.

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