How to Sell Hard Information

Abstract The seller of an asset has the option to buy hard information about the value of the asset from an intermediary. The seller can then disclose this information before selling the asset in a competitive market. We study how the intermediary designs and sells hard information to robustly maximize the intermediary's revenue across all equilibria. Even though the intermediary could use an accurate test that reveals the asset’s value, we show that robust revenue maximization leads to a noisy test with a continuum of possible scores. In addition, the intermediary always charges the seller for disclosing the test score to the market, but not necessarily for running the test. This enables the intermediary to robustly appropriate a significant share of the surplus resulting from the asset sale.

This is a pre-copyedited, author-produced PDF of an article accepted for publication in The Quarterly Journal of Economics following peer review. The version of record [How to Sell Hard Information. The Quarterly Journal of Economics (2021)] is available online at: https://doi.org/10.1093/qje/qjab024.

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Work Title How to Sell Hard Information
Access
Open Access
Creators
  1. S. Nageeb Ali
  2. Nima Haghpanah
  3. Xiao Lin
  4. Ron Siegel
License In Copyright (Rights Reserved)
Work Type Article
Publisher
  1. Oxford University Press (OUP)
Publication Date August 16, 2021
Publisher Identifier (DOI)
  1. 10.1093/qje/qjab024
Source
  1. The Quarterly Journal of Economics
Deposited June 07, 2022

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Version 1
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  • Created
  • Added HowtoSellHardInformation-1.pdf
  • Added Creator S Nageeb Ali
  • Added Creator Nima Haghpanah
  • Added Creator Xiao Lin
  • Added Creator Ron Siegel
  • Published
  • Updated Work Title, Description Show Changes
    Work Title
    • How to Sell Hard Information
    • ! How to Sell Hard Information
    Description
    • <jats:title>Abstract</jats:title>
    • <jats:p>The seller of an asset has the option to buy hard information about the value of the asset from an intermediary. The seller can then disclose this information before selling the asset in a competitive market. We study how the intermediary designs and sells hard information to robustly maximize the intermediary's revenue across all equilibria. Even though the intermediary could use an accurate test that reveals the asset’s value, we show that robust revenue maximization leads to a noisy test with a continuum of possible scores. In addition, the intermediary always charges the seller for disclosing the test score to the market, but not necessarily for running the test. This enables the intermediary to robustly appropriate a significant share of the surplus resulting from the asset sale.</jats:p>
    • Abstract
    • The seller of an asset has the option to buy hard information about the value of the asset from an intermediary. The seller can then disclose this information before selling the asset in a competitive market. We study how the intermediary designs and sells hard information to robustly maximize the intermediary's revenue across all equilibria. Even though the intermediary could use an accurate test that reveals the asset’s value, we show that robust revenue maximization leads to a noisy test with a continuum of possible scores. In addition, the intermediary always charges the seller for disclosing the test score to the market, but not necessarily for running the test. This enables the intermediary to robustly appropriate a significant share of the surplus resulting from the asset sale.
  • Renamed Creator S. Nageeb Ali Show Changes
    • S Nageeb Ali
    • S. Nageeb Ali
  • Updated Work Title Show Changes
    Work Title
    • ! How to Sell Hard Information
    • How to Sell Hard Information
  • Updated