Optimal Contracting Of New Experience Goods
نویسندگان
چکیده
We model new experience goods in the context of dynamic mechanism design. These are goods for which an agent is unsure of her valuation but can learn it through consumption experience. We consider a dynamic environment with a single buyer and seller in which contracting occurs over T periods, where each time the agent consumes the object, she receives a signal which allows her to revise her valuation. In this setting, experimentation with the product is strategic both for the buyer and seller. We derive the efficient and seller optimal contracts and compare them. We present a simple two period example which highlights some of the key features of the model. Finally, the methodology developed in the paper can be used to design efficient and optimal contracts in a multi-buyer setting with learning, where each buyer has single unit demand and there is a single object for sale in each period.
منابع مشابه
Used goods, not used bads: Profitable secondary market sales for a durable goods channel
The existing literature on channel coordination typically models markets where used goods are not sold, or are sold outside the standard channel. However, retailers routinely sell used goods for a profit in markets like textbooks. Further, such markets are characterized by a renewable consumer population over time, rather than the static consumer population often assumed in prior literature. We...
متن کاملMulti-Agent Bidding and Contracting for Non-Storable Goods
We study electronic bidding and contracting for nonstorable goods such as electric power using multi-GA agents and game theoretical approaches. In this framework, there is a long-term contract market as well as a back-stop spot market. Seller agents bid into an electronic bulletin board their contract offers in terms of price or capacity, while Buyer agents decide how much to contract with Sell...
متن کاملJoint Pricing and Inventory Control for Seasonal and Substitutable Goods Mentioning the Symmetrical and Asymmetrical Substitution
Nowadays many well-known firms may produce similar products at different prices in order to remain in the competitive environment. The price differences may cause substitution condition which motivates the customers to substitute the similar cheaper product with an expensive one leading to an environment which is known as “customer-based price driven substitution”. This research proposes a new ...
متن کاملDynamic Pricing of New Experience Goods∗
We develop a dynamic model of experience goods pricing with independent private valuations. We show that the optimal paths of sales and prices can be described in terms of a simple dichotomy. In a mass market, prices are declining over time. In a niche market, the optimal prices are initially low followed by higher prices that extract surplus from the buyers with a high willingness to pay. We c...
متن کاملAn Incomplete Contract Perspective on Public Good Provision
This paper surveys what can be learned from recent advances in the incomplete contract literature to understand how public goods are or should be provided. The paper starts with a section on the full information case that presents and discusses the classical Samuelson condition on the optimal provision of public goods. The rest of the paper presents results under asymmetric information. It is c...
متن کامل