The Economics of Social Data

Alessandro Bonatti, Dirk Bergemann and Tan Gan

No 14466, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: 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 number of consumers grows large.

Keywords: Social data; Personal information; Consumer privacy; Privacy paradox; Data intermediaries; Data externality; Data flow; Data policy; Data rights (search for similar items in EconPapers)
JEL-codes: D44 D82 D83 (search for similar items in EconPapers)
Date: 2020-03
New Economics Papers: this item is included in nep-mic and nep-pay
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

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Related works:
Journal Article: The economics of social data (2022)
Working Paper: The Economics of Social Data (2022)
Working Paper: The Economics of Social Data (2021)
Working Paper: The Economics of Social Data (2021)
Working Paper: The Economics of Social Data (2020)
Working Paper: The Economics of Social Data (2020)
Working Paper: The Economics of Social Data (2019)
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