Data Sharing with Dynamic Contracts

Alessandro Dovis and Paolo Martellini

No 33051, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper studies optimal information disclosure in dynamic economies with income risk, where an incumbent firm learns about the consumer’s persistent type and its competitors do not. When the incumbent can commit to long-term contracts, optimal disclosure reveals no information. Without commitment, no cross-subsidization is feasible under any disclosure policy due to adverse selection. Partial disclosure is typically optimal, and it implements intertemporal consumption smoothing. We apply the model to credit markets, studying how information sharing should respond to fintech entry, and to health insurance, asking how many firms should have access to a policyholder’s health record.

JEL-codes: E0 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-acc, nep-cta and nep-mic
Note: EFG PE CF
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