Sale Timing Under Buyer Valuation Uncertainty : When to Endure Information Disadvantage?

When buyers are uncertain about product valuations for future consumption, the seller incurs an information disadvantage if it allows consumers to purchase late, after they (privately) learn their true consumption state. Despite this, when customers are heterogeneous, it may be optimal for the seller to endure an information disadvantage by selling late. This paper enriches prior insights about how buyer uncertainty affects the seller's decision about sale timing. We show that late selling gives the seller more flexibility in pooling high-valuation customers. This flexibility is attractive when buyer uncertainty about valuations is sufficiently high. Moreover, the asymmetry between the uncertain buyer valuations and the constant marginal cost may lead to higher profit margin under spot selling. Our research underlines the need for managers to examine the interaction between buyer valuation uncertainty, customer heterogeneity, and cost structure, in determining the optimal selling strategy