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The Economics Of Social Data, Dirk Bergemann, Alessandro Bonatti, Tan Gan
The Economics Of Social Data, Dirk Bergemann, Alessandro Bonatti, Tan Gan
Cowles Foundation Discussion Papers
A data intermediary pays consumers for information about their preferences and sells the information so acquired to firms that use it to tailor their products and prices. The social dimension of the individual data - whereby an individual’s data are predictive of the behavior of others - generates a data externality that reduces the intermediary’s cost of acquiring information. We derive the intermediary’s optimal data policy and show that it preserves the privacy of the consumers’ identities while providing precise information about market demand to the firms. This enables the intermediary to capture the entire value of information as the …
The Economics Of Social Data, Dirk Bergemann, Alessandro Bonatti, Tan Gan
The Economics Of Social Data, Dirk Bergemann, Alessandro Bonatti, Tan Gan
Cowles Foundation Discussion Papers
A data intermediary acquires signals from individual consumers regarding their preferences. The intermediary resells the information in a product market wherein firms and consumers tailor their choices to the demand data. The social dimension of the individual data -whereby a consumer’s data are predictive of others’ behavior- generates a data externality that can reduce the intermediary’s cost of acquiring the information. The intermediary optimally preserves the privacy of consumers’ identities if and only if doing so increases social surplus. This policy enables the intermediary to capture the total value of the information as the number of consumers becomes large.
The Economics Of Social Data, Dirk Bergemann, Alessandro Bonatti, Tan Gan
The Economics Of Social Data, Dirk Bergemann, Alessandro Bonatti, Tan Gan
Cowles Foundation Discussion Papers
We propose a model of data intermediation to analyze the incentives for sharing individual data in the presence of informational externalities. A data intermediary acquires signals from individual consumers regarding their preferences. The intermediary resells the information in a product market in which firms and consumers can tailor their choices to the demand data. The social dimension of the individual data - whereby an individual’s data are predictive of the behavior of others - generates a data externality that can reduce the intermediary’s cost of acquiring information. We derive the intermediary’s optimal data policy and establish that it preserves the …
The Economics Of Social Data, Dirk Bergemann, Alessandro Bonatti, Tan Gan
The Economics Of Social Data, Dirk Bergemann, Alessandro Bonatti, Tan Gan
Cowles Foundation Discussion Papers
A data intermediary pays consumers for information about their preferences, and sells the information so-acquired to firms that use it to tailor their product offers and prices. The social dimension of the individual data - whereby an individual’s data is predictive of the behavior of others - generates a data externality that reduces the intermediary’s cost of acquiring information. We derive the data intermediary’s optimal information policy, and show that it preserves privacy over the identity of the consumers, but provides precise information about market demand to the firms.