Optimal Information Structures for the Seller of a Search Good
Information Systems Research · 1990 · Volume 1 · Issue 2
Abstract
This paper examines an information system design problem faced by the seller of a search good who sells his product in a competitive market to well-informed consumers. The formulation results in a nonlinear optimization problem having a special structure which can be exploited in solving the first-order conditions. Closed-form solutions and comparative statics results are given in the case of a uniformly-distributed attribute, and we provide a numerical example in the case of a normally-distributed attribute.
Keywords
economics of information systems, design of information systems, design of information structures, information economics, optimal measurement
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