DREAM Seminar by Stephen Morris (MIT)

Screening with Persuasion

Joint with Dirk Bergemann and Tibor Heumann.

Guest panelists: EllenMuir and Andreas Kleiner.

Abstract
We consider a general nonlinear pricing environment with private information. The seller can control both the signal that the buyers receive about their value and the selling mechanism. We characterize the optimal menu and information structure that jointly maximize the seller’s profits. The optimal screening mechanism has finitely many items even with a continuum of values. We identify sufficient conditions under which the optimal mechanism has a single item. Thus the seller decreases the variety of items below the efficient level as a by-product of reducing the information rents of the buyer.

About Prof Morris 
Stephen Morris is an economic theorist recognized for his work on the foundations and applications of game theory. He is known particularly for his work on higher-order beliefs in economics and game theory. He was born in Weybridge, England, and graduated from the University of Cambridge with a degree in Mathematics and Economics in 1985. He received a Ph.D. in Economics from Yale University in 1991, after working as an economist for two years for the Government of Uganda. He taught at the University of Pennsylvania, Yale University and Princeton University before joining the Massachusetts Institute of Technology in 2019, where he is currently the Peter A. Diamond Professor of Economics. He served as President of the Econometric Society in 2019 and will be President of the Society for Advancement of Economic Theory in 2023.