Optimal nonlinear pricing by a monopolist with information ambiguity

B-Tier
Journal: International Journal of Industrial Organization
Year: 2015
Volume: 40
Issue: C
Pages: 60-66

Authors (3)

Zheng, Mingli (University of Macau) Wang, Chong (not in RePEc) Li, Chaozheng (not in RePEc)

Score contribution per author:

0.670 = (α=2.01 / 3 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We consider the optimal nonlinear pricing by an ambiguity-averse monopolist. The monopolist's subjective belief about the distribution of buyers is described by ϵ-contamination of an additive probability. We find that under a maxmin utility decision rule and with a continuum of buyers, ambiguity aversion leads to bunching at the bottom in the optimal contract, and the distortion at the bottom is reduced. Other high valuation buyers are offered the same quantity as in the case without ambiguity, but they get a greater discount.

Technical Details

RePEc Handle
repec:eee:indorg:v:40:y:2015:i:c:p:60-66
Journal Field
Industrial Organization
Author Count
3
Added to Database
2026-01-29