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arXiv · 2411.06312

Multidimensional Screening with Precise Seller Information

Mira Frick·Ryota Iijima·Yuhta Ishii
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Abstract

A multi-product monopolist faces a buyer who is privately informed about his valuations for the goods. As is well-known, optimal mechanisms are in general complicated, while simple mechanisms -- such as pure bundling or separate sales -- can be far from optimal and do not admit clear-cut comparisons. We show that this changes if the monopolist has sufficiently precise information about the buyer's valuations: Now, pure bundling always outperforms separate sales; moreover, there is a sense in which pure bundling performs essentially as well as the optimal mechanism. To formalize this, we characterize how fast the corresponding revenues converge to the first-best revenue as the monopolist's information grows precise: Pure bundling achieves the same convergence rate to the first-best as optimal mechanisms; in contrast, the convergence rate under separate sales is suboptimal.

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Mira Frick, Ryota Iijima, Yuhta Ishii. 2024-11-09. Multidimensional Screening with Precise Seller Information. https://arxiv.org/abs/2411.06312

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