Essays in Information Economics

These essays explore a variety of questions in information economics. Chapter 1 studies the optimal price and information disclosure policy for a seller introducing a new product, when buyers can search for an outside option at a cost. The buyer knows her outside option distribution, but the seller knows only its mean and an upper bound on its support, and evaluates any selling strategy by its guaranteed profit. I find that full disclosure is optimal only when the search cost is high, and different kinds of partial disclosure policies are optimal for lower search costs. Perhaps surprisingly, when the search cost decreases, the seller may increase the price, and provide less precise information. These results shed light on the large variations in information disclosure policies among new products, and suggest that technological advancements that reduce search costs may increase prices and make information provision noisier. Chapter 2 studies a class of verifiable disclosure games where the sender's payoff is state independent and the receiver's optimal action only depends on the expected state. I identify conditions for an information design outcome to be an equilibrium outcome of the verifiable disclosure game, and give simple sufficient conditions under which the sender does not benefit from commitment power. These results help me to characterize the sender's preferred equilibria and her equilibrium payoff set in a class of verifiable disclosure games. I apply these insights to study influencing voters and selling with quality disclosure. Chapter 3 studies procurement settings where the buyer's valuation of the good supplied depends directly on its quality, and the quality is both unverifiable and unobservable to the buyer. For a broad class of procurement problems, I identify the procurement mechanisms that maximize the buyer's expected payoff and the expected social surplus, respectively. In both cases, the optimal mechanism can be implemented by a dynamic combination of the two commonly used procurement methods: auction and negotiation. Procurement mechanisms of this kind are used in the Italian public procurement system.