Selling information in competitive environments

DOI10.1016/J.JET.2023.105779MaRDI QIDQ6122064zbMATH OpenOpenAlexFDO

Authors Alessandro Bonatti, Munther A. Dahleh, Thibaut Horel, Amir Nouripour

Publication date 27 March 2024

Published in Journal of Economic Theory (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/2202.08780

zbMATH Keywords

competitiondataexternalitiesinformation designscreening

Mathematics Subject Classification ID

Games with incomplete information, Bayesian games (91A27) Mechanism design theory (91B03) Economics of information (91B44)

Abstract: Data buyers compete in a game of incomplete information about which a single data seller owns some payoff-relevant information. The seller faces a joint information- and mechanism-design problem: deciding which information to sell, while eliciting the buyers' types and imposing payments. We derive the welfare- and revenue-optimal mechanisms for a class of games with binary actions and states. Our results highlight the critical properties of selling information in competitive environments: (i) the negative externalities arising from buyer competition increase the profitability of recommending the correct action to one buyer exclusively; (ii) for the buyers to follow the seller's recommendations, the degree of exclusivity must be limited; (iii) the buyers' obedience constraints also limit the distortions in the allocation of information introduced by a monopolist seller; (iv) as competition becomes fiercer, these limitations become more severe, weakening the impact of market power on the allocation of information.

Recommendations

• Information design for selling search goods and the effect of competition
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Cites work

• A monopolistic market for information
• Bayes correlated equilibrium and the comparison of information structures in games
• Direct and Indirect Sale of Information
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• scientific article; zbMATH DE number 49749 (Why is no real title available?)
• Multidimensional mechanism design for auctions with externalities
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Cited in

(4)

• Information design for selling search goods and the effect of competition
• Competitive information design for Pandora's Box
• Towards data auctions with externalities
• The effects of big-data-driven information service sales on cooperation modes in a supply chain

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