Multi-Dimensional Screening with Endogenous Information Disclosure

TL;DR

This paper explores how a seller can optimize revenue in multi-product markets by controlling information disclosure, showing that simple pricing strategies can be highly effective when the seller manages buyer information.

Contribution

It demonstrates that seller-controlled information design significantly improves revenue outcomes, with simple pricing strategies being near-optimal under certain conditions.

Findings

Uniform pricing guarantees at least half of the optimal revenue.

Deterministic pricing is optimal for negatively affiliated or exchangeable distributions.

Information design enhances the effectiveness of pricing mechanisms.

Abstract

We study multi-product monopoly pricing where the seller jointly designs the selling mechanism and the information structure for the buyer to learn his values. Unlike the case with exogenous information, we show that when the seller controls information, even uniform pricing guarantees at least half of the optimal revenue. Moreover, for negatively affiliated or exchangeable value distributions, deterministic pricing is revenue-optimal. Our results highlight the power of information design in making pricing mechanisms approximately optimal in multi-dimensional settings.