Seller experimentation and trade

Abstract This paper studies the effect of trade opportunities on a seller’s incentive to acquire information through experimentation. I characterize unique equilibrium outcome and discuss effects variations in structure probability trade. The main result is that more accurate for buyer can reduce social welfare. Efficiency requires offers price seller always accepts experiments when it socially optimal do so. When receives very informative signals about positive experimentation outcomes, absence such signal induce purchase good only with low but known quality at price. If an negative might prefer not experiment so as avoid risk generating could trigger her offer.