Multidimensional Screening with Precise Seller Information
Abstract
A multi-product monopolist faces a buyer who is privately informed about his valuations for the goods. As is well-known, optimal mechanisms are in general complicated, while simple mechanisms -- such as pure bundling or separate sales -- can be far from optimal and do not admit clear-cut comparisons. We show that this changes if the monopolist has sufficiently precise information about the buyer's valuations: Now, pure bundling always outperforms separate sales; moreover, there is a sense in which pure bundling performs essentially as well as the optimal mechanism. To formalize this, we characterize how fast the corresponding revenues converge to the first-best revenue as the monopolist's information grows precise: Pure bundling achieves the same convergence rate to the first-best as optimal mechanisms; in contrast, the convergence rate under separate sales is suboptimal.
Keywords
Cite
@article{arxiv.2411.06312,
title = {Multidimensional Screening with Precise Seller Information},
author = {Mira Frick and Ryota Iijima and Yuhta Ishii},
journal= {arXiv preprint arXiv:2411.06312},
year = {2025}
}