Sponsored Data: Smarter Data Pricing with Incomplete Information

Xiaowei Mei (), Hsing Kenneth Cheng (), Subhajyoti Bandyopadhyay (), Liangfei Qiu and Lai Wei ()
Additional contact information
Xiaowei Mei: Department of Management and Marketing, The Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong
Hsing Kenneth Cheng: Department of Information Systems and Operations Management, Warrington College of Business, University of Florida, Gainesville, Florida 32611
Subhajyoti Bandyopadhyay: Department of Information Systems and Operations Management, Warrington College of Business, University of Florida, Gainesville, Florida 32611
Lai Wei: Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai 200030, China

Information Systems Research, 2022, vol. 33, issue 1, 362-382

Abstract: With the upcoming next-generation 5G networks, mobile network operators (MNOs, such as AT&T, T-Mobile, and Verizon) are investigating new business models that encourage content providers (such as Netflix and Spotify) to sponsor data for consumers. Sponsored data allow customers to browse, stream, and enjoy content from their data sponsors without impacting their monthly data plan allowance. We analyze this recent phenomenon using an incomplete information game-theoretical model, where the MNO does not observe consumers’ types (personal valuation of mobile data) and provides multiple data plans to consumers. We find that the impact of sponsored data on consumer surplus crucially depends on whether the MNO has complete information over consumer types: Under complete information, sponsored data do not improve consumer surplus. However, under incomplete information, sponsored data increase consumer surplus. Our analysis also shows that under incomplete information, the MNO should allow sponsored data in a wider range of market conditions than those under complete information. Our study suggests that prior literature tends to underestimate both the long-run detrimental effect of sponsored data on content diversity and the short-run beneficial effect on consumer surplus. Our findings offer important managerial implications for the MNO, who is interested in optimizing the data plans, and for policymakers who regulate the wireless internet market.

Keywords: sponsored data; wireless internet; game theory; incomplete information; consumer surplus (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://dx.doi.org/10.1287/isre.2021.1063 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:orisre:v:33:y:2022:i:1:p:362-382

Access Statistics for this article

More articles in Information Systems Research from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().