When does a firm disclose product information?∗ Fr´ed´eric Koessler

†

R´egis Renault

‡

December 6, 2010

Abstract A firm chooses a price and how much information to disclose about its product to a consumer whose tastes are unknown to the firm. We provide a necessary and sufficient condition on the match function for full disclosure to be the unique equilibrium outcome whatever the cost function and prior beliefs about product and consumer types. That condition is consistent with any shape of the perfect information demand curves for the various product types. It encompasses the condition that all consumers agree on the ranking of product types’ quality as in standard persuasion games, but it also allows for different consumers to have different rankings of the potential product types. When product and consumer types are independently distributed, a necessary and sufficient condition on equilibrium payoffs is that they are at least as high as those under full disclosure for all product types; in particular, full disclosure is always an equilibrium with independent types. Keywords: Consumer heterogeneity; information certification; persuasion game; unravelling of information. JEL Classification: C72; D82; L15.

∗

We thank seminar participants at University of Alberta, Bonn (Max Planck Institute), CREST X-LEI, University College Dublin, University College London, HEC Paris, University of Mannheim, University of Montreal, University of California San Diego, University of Southern California, University of Vienna, University of Virginia, the 2010 EARIE conference, the 2010 CESifo conference on applied microeconomics, the 2nd workshop on the economics of advertising and marketing, and the 3rd Transatlantic Theory Workshop. † Paris School of Economics – CNRS. [email protected] ‡ Universit´e de Cergy-Pontoise, Thema. [email protected]

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