Data Collection by an Informed Seller

Shota Ichihashi and Alex Smolin

No 17239, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: A seller faces a consumer with an uncertain value for the product. The seller has imperfect private information about the value and requests additional data to set the price. The consumer can decline any request. The consumer's willingness to provide data depends on his belief about the seller's type which in turn depends on the request. We show that the type uncertainty limits the scope of data collection: All equilibrium payoffs are spanned by fully pooling equilibria in which the seller collects the same data regardless of the type. The seller's private information lowers efficiency and profits, but benefits the consumer by fueling his skepticism and preventing excessive data collection. Having less private information may enable the seller to collect more data directly from the consumer and may lower the overall consumer welfare.

Keywords: Consumer privacy; Data collection; Information design; Mechanism design; Price discrimination (search for similar items in EconPapers)
JEL-codes: D42 D82 D83 (search for similar items in EconPapers)
Date: 2022-04
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Working Paper: Data Collection by an Informed Seller (2022)
Working Paper: Data Collection by an Informed Seller (2022)
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