
Uncertainty and Imperfect Information in Markets
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6.5.5 Selfish Buyer Actions
We now turn to wholly selfish actions by the buyer. As a somewhat general framework
suppose that the timing of the game between buyer and seller is the following:
• Buyersinksaninvestment
I
R
. This affects his benefit,
b
R
, should he obtain
a unit of some good, asset, or service from the seller. The buyer is assumed to want
at most one unit.
• Thesellerobservesasignal,s, that may contain information about b.
• ThesellermakesaTIOLI offertoselloneunitatpricep.
• Afterobservingb and s, the buyer decides whether to buy or not.
The payoffs to buy ...