Essays in economics of information

This thesis is a collection of three essays in economics of information. Chapter 1 is a general introduction and Chapters 2 to 4 form the core of the thesis. Chapter 2 analyzes information dissemination on the Internet. Online platforms such as Amazon, TripAdvisor or Yelp are now key sources of information for modern consumers. The proportion of consumers consulting online reviews prior to purchasing a good or a service has grown persistently. Yet, sellers have been accused of hiring shills to post fake reviews about their products. This raises the question: Does the presence of shills make reviews less informative? I show that the answers to this question depend on the way the platform presents and summarizes reviews on its website. In particular, I find that withholding information by garbling the reviews benefits information dissemination by inducing the seller to destroy less information with manipulation. Next, I show that the platform's choice regarding how to present reviews hinges on its revenue source. Indeed, a platform that receives sales commissions optimally commits to publishing information differently from a platform that receives revenues from advertisements or from subscription fees. Incidentally, such platforms have contrasting impacts on the amount of information that is transmitted by reviews. Chapter 3 is co-authored with Marc Santugini. In this chapter, we study the impact of third-degree price discrimination in the presence of uninformed buyers who extract noisy information from observing prices. In a noisy learning environment, it is shown that price discrimination can be detrimental to the firm and beneficial to the consumers. On the one hand, discriminatory pricing reduces consumers’ uncertainty, i.e., the variance of posterior beliefs upon observing prices is reduced. Specifically, observing two prices under discriminatory pricing provides more information than one price under uniform pricing even when discriminatory pricing reduces the amount of information contained in each price. On the other hand, it is not always optimal for the firm to use discriminatory pricing since the presence of uninformed buyers provides the firm with the incentive to engage in noisy price signaling. Indeed, if the benefit from price flexibility (through discriminatory pricing) is offset by the cost of signaling quality through two distinct prices, then it is optimal to integrate markets and to use uniform pricing. Finally, Chapter 4 is co-authored with Sidartha Gordon. In this chapter, we study a class of games where players face restrictions on how much information they can obtain on a common payoff relevant state, but have some leeway in covertly choosing the dependence between their signals, before simultaneously choosing actions. Using a new stochastic dependence ordering between signals, we show that each player chooses information that is more dependent on the information of other players whose actions are either isotonic and complements with his actions or antitonic and substitutes with his actions. Similarly, each player chooses information that is less dependent on the information of other players whose actions are antitonic and complements with his actions or isotonic and substitutes with his actions. We then provide sufficient conditions for information structures such as public or private information to arise in equilibrium.

Keyphrases: Learning, Information Acquisition, Endogenous Information Structure, Information Design, Noisy-signaling Game, Third-degree Price Discrimination, Strategic Complementarities, Online Commerce, Internet Platform