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The Design and Price of Information

Dirk Bergemann (), Alessandro Bonatti () and Alex Smolin ()

No 2049R, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: A data buyer faces a decision problem under uncertainty. He can augment his initial private information with supplemental data from a data seller. His willingness to pay for supplemental data is determined by the quality of his initial private information. The data seller optimally offers a menu of statistical experiments. We establish the properties that any revenue-maximizing menu of experiments must satisfy. Every experiment is a non-dispersed stochastic matrix, and every menu contains a fully informative experiment. In the cases of binary states and actions, or binary types, we provide an explicit construction of the optimal menu of experiments.

Keywords: Information design; Price of information; Statistical experiments; Mechanism design; Price discrimination; Hypothesis testing (search for similar items in EconPapers)
JEL-codes: D42 D82 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-com, nep-exp and nep-mic
Date: 2017-06
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Published in American Economic Review (January 2018)

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Related works:
Journal Article: The Design and Price of Information (2018) Downloads
Working Paper: The Design and Price of Information (2016) Downloads
Working Paper: The Design and Price of Information (2016) Downloads
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