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arXiv · 2411.11183

Competition, Persuasion, and Search

Teddy Mekonnen·Bobak Pakzad-Hurson
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Abstract

How does competition in markets for information affect the creation and division of surplus? We study this question in a search environment in which an agent searches sequentially for a high-quality good and learns about the quality of sampled goods by repeatedly purchasing signals from profit-maximizing information brokers. Brokers design and price signals but can commit only to spot contracts. We characterize the equilibrium payoff set as a function of the market structure -- the number of competing brokers. When search costs are low, market structure affects neither surplus generation nor its division. When costs are high, however, competition benefits the agent but reduces total surplus relative to monopoly. Methodologically, we extend repeated-games theory to stopping problems such as sequential search.

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Teddy Mekonnen, Bobak Pakzad-Hurson. 2024-11-17. Competition, Persuasion, and Search. https://arxiv.org/abs/2411.11183

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