The social value of information on product quality |
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Authors: | Kenneth S Corts |
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Institution: | Rotman School of Management, University of Toronto, 105 St. George St., Toronto, Ontario M5S 3E6, Canada |
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Abstract: | In the context of a seller with private information about product quality, I show that revelation of information on product quality is sometimes, but not always, socially valuable. When it is socially valuable, there is generally a tradeoff between the acquisition and revelation of finer, but more costly information and the revelation of coarser, but less costly information. As a result, it can be socially optimal for firms to reveal only coarse private information. |
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Keywords: | Social welfare Private information Learning |
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