“Efficiency vs Market Thickness”
Coautoreado con Dirk Bergemann y Stephen Morris.
Abstract: Private information about internet advertising takes a particular distributed form. The seller’s private information (about desirable characteristics of viewers) must be combined with the buyer’s private information (about the characteristics of viewers) in order to evaluate the potential value of a match. We ask: what is the optimal information for the seller to reveal about the quality of the match. Sellers face a classic economic trade-off: providing more information improves the quality of matches (and thus social surplus) but also implies thinner markets with less competition and thus high information rents for buyers. We show that it is optimal to fully reveal the quality of lower value matches (where competition will be high) but pool the value of premium matches (where competition will be low).
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