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Balázs Szentes

Balázs Szentes

is a professor at the London School of Economics. After receiving his PhD in Economics from Boston University in 2002, he held positions at the University of Chicago and at the University College London. Professor Szentes has co-authored various contributions in top journals in economics and game theory, in particular in contract theory and auction theory. He was many times invited to give talks at seminars and conferences, last time to the World Congress of the Game Theory Society. He is member of the editorial board of the Review of Economic Studies and he was also editor of the American Economic Review.

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Doron Ravid, Anne-Katrin Roesler, Balazs Szentes: Learning Before Trading: On the Inefficiency of Ignoring Free Information

This paper analyzes a bilateral trade model where the buyer's valuation for the object is uncertain and she can privately purchase any signal about her valuation. The seller makes a take-it-or-leave-it offer to the buyer. The cost of a signal is smooth and increasing in informativeness. We characterize the set of equilibria when learning is free and show that they are strongly Pareto ranked. Our main result is that, when learning is costly but the cost of information goes to zero, equilibria converge to the worst free-learning equilibrium.

Last modified: 2019.10.09.