Discriminatory Information Disclosure∗

We consider a price discrimination problem in which a seller has a single object for sale to a potential buyer. At the time of contracting, the buyer’s private type is his incomplete private information about his value, and the seller can disclose additional private information to the buyer. We study the question of whether discriminatory infor-mation disclosure can be profitable to the seller under the assumption that, for the same disclosure policy, the amount of additional private information that the buyer can learn depends on his private type. In both discrete-type and continuous-type setting, we show that discriminatory disclosure can be optimal because, compared to full disclosure, it re-duces the information rent accrued to private types of the buyer without much impact on the trade surplus. A complete characterization of the optimal discriminatory disclosure policy is provided in the discrete-type setting. We also establish sufficient conditions for the optimality of full information disclosure in the continuous-type setting. ∗We are indebted to Dirk Bergemann for his support in various stages of this project. We thank the participants of 2013 Cowles Summer Conference in Economic Theory, especially our discussant Philipp Strack, and Simon Board, Alessandro Pavan, Roland Strauss and Balazs Szentes for many helpful comments and suggestions. Shi is grateful to Social Sciences and Humanities Research Council of Canada for financial support.