Abstract
This article studies an information design problem in a sequential consumer search environment. Consumers, whose valuation of firms' products is uncertain, observe a noisy signal about the valuation upon being matched with a firm. The goal is to characterize those signal structures that maximize consumer surplus. We show that the consumer-optimal signal structure can be found within the class of conditional unit-elastic demand signal distributions. A rich set of properties and comparative statics of the consumer-optimal signal distributions are also derived.
Original language | English |
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Pages (from-to) | 386-403 |
Number of pages | 18 |
Journal | The RAND Journal of Economics |
Volume | 53 |
Issue number | 2 |
DOIs | |
Publication status | Published - 1 Jun 2022 |