Topic: Benefits and Challenges of Ambiguous Information

Speaker: Matthias Lang (Ludwig-Maximilians-University of Munich)

Time & venue:
Fridays, 10:00 - 12:00 (starting on 27.10.2023); see schedule for seminar venues 

Description:
The Research Seminar in Economics offers a platform for invited speakers to present their current research, thereby promoting the exchange between speakers and faculty members. It covers empirical as well as theoretical contributions across all fields of economics.

More information can be found on the seminar's website.

Abstract: 

We study the welfare effects of ambiguous information for a buyer with α-max-min preferences and a price-setting seller. The buyer privately receives information about her valuation. We show that both  can benefit when this information is ambiguous, and we characterize all possible combinations of consumer and producer surplus. Ambiguity concerning the valuation perceived by the buyer when making the purchase decision can induce the seller to change the price. Before receiving information, ambiguity concerning the purchase decision can make the buyer optimistic about buying only for high valuations relaxing the participation constraint. Our results inform the regulation of ambiguous information.

Find the working paper here.