BROKERAGE COMMISSION SCHEDULES

It is generally optimal for risk-sharing reasons to base a charge for information on the signal realization. When this is not possible, a ch arge based on the amount of trading, a brokerage commission, may be a good alternative. The optimal brokerage commission schedule is derived for a risk-neutral information seller faced with risk-averse purchase rs who may differ in their risk aversion. Revenues from the brokerage commission are compared with those from a fixed charge for information and the optimal mutual fund management fee.