CIAS invites you to the next talk of the Corvinus Game Theory Seminar.
Mar. 30 (12-13) room C.714
Sreoshi Banerjee (BME, QSMS)
How to sell an object under costly attribute verification
We study a game with one buyer and one seller. The seller tries to sell a product at price “p” and knows the true state of the world, viz., the product quality. A product’s quality is explained by its attributes. The buyer decides whether to verify certain attributes of the product before making his purchase decision. The verification, however, is costly and the cost of verification is exogenously given. In this preliminary draft, we characterize the full symmetric equilibrium for the case with two attributes. We show that for any given cost, which (p*,k*) can be sustained in the equilibrium. In other words, for a given c, what is the optimal price that the seller charges and how many attributes should the buyer verify. We offer a few insights on the general k-attribute case and study how price can be used as an instrument to regulate the verification decision of a buyer.