How to distribute information

Abstract

In this paper a difficult question is answered with a surprisingly simple answer. A monopolist who possesses nested information can earn money from selling it at different levels of precision to investors. The problem is to maximize profits by choosing the optimal distribution of information among the investors. I show that, the optimal distribution is to give all informed investors the same level of precision. The model belying this result is a continuous version of Grossman and Stiglitz (1980).