Journal of Economic Literature (JEL) Code(s)
D44, D82, D83.
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.
Bergemann, Dirk; Bonatti, Alessandro; and Gan, Tan, "The Economics of Social Data" (2019). Cowles Foundation Discussion Papers. 47.