Bundling Information Goods: Pricing, Profits, and Efficiency
Management Science
Service Design and Price Competition in Business Information Services
Operations Research
Markets for Product Modification Information
Marketing Science
Market Information and Firm Performance
Management Science
Investment Implications of Information Acquisition and Leakage
Management Science
Nonlinear Pricing of Information Goods
Management Science
Optimal strategies of IT consulting firms: the impact of license fee and open source
Proceedings of the 10th international conference on Electronic commerce
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Diagnostic information allows an agent to predict the state of nature about the success of an investment project better than the prior. We analyze the optimal pricing scheme for selling diagnostic information to buyers with different, privately known, ex ante success probability. Investment costs and returns of successful projects are assumed to be the same for all buyers. The value of diagnostic information is the difference in expected payoffs with and without it, and we show that the willingness to pay for diagnostic information is nonmonotonic in the ex ante success probability. When the information seller can offer only one quality level, and negative payments are not allowed, we find that the optimal menu of (linear) contracts is remarkably simple. A pure royalty is offered to buyers with low ex ante success probability, and a pure fixed fee is offered to buyers with high ex ante success probability.