Selling Information in Competitive Environments

02/17/2022
by   Alessandro Bonatti, et al.
0

We consider a setting where data buyers compete in a game of incomplete information, about which a data seller owns some payoff relevant information. We formulate the problem facing the seller as a joint information and mechanism design problem: deciding which information to sell, while at the same time eliciting the private value types of the buyers and collecting payments. We derive the welfare- and revenue-optimal mechanisms for a class of binary games. Our results reveal some important features of selling information in competitive environments: (i) the negative externalities arising from competition among buyers increase the profitability of selling information to one of the buyers exclusively; (ii) in order for the buyers to follow the seller's action recommendations, the degree of information exclusivity must be limited; (iii) the same obedience constraints also limit the distortions in the allocation of information that can be introduced by a monopolist seller; (iv) as competition across buyers becomes fiercer, these limitations become more severe, weakening the impact of market power on the equilibrium allocation of information.

READ FULL TEXT

Please sign up or login with your details

Forgot password? Click here to reset