• Corpus ID: 244305974

Selling Information in Competitive Environments

@article{Bonatti2022SellingII,
  title={Selling Information in Competitive Environments},
  author={Alessandro Bonatti and Munther A. Dahleh and Thibaut Horel and Amir Nouripour},
  journal={ArXiv},
  year={2022},
  volume={abs/2202.08780}
}

• A. Bonatti, M. Dahleh, +1 author Amir Nouripour
• Published 17 February 2022
• Economics
• ArXiv

Data buyers compete in a game of incomplete information about which a single data seller owns some payoff-relevant information. The seller faces a joint information-and mechanism-design problem: deciding which information to sell, while eliciting the buyers’ types and imposing payments. We derive the welfare- and revenue-optimal mechanisms for a class of games with binary actions and states. Our results highlight the critical properties of selling information in competitive environments: (i) the negative externalities arising from buyer competition increase the profitability of recommending the correct action to one buyer exclusively; (ii) for the buyers to follow the seller’s recommendations, the degree of exclusivity must be limited; (iii) the buyers’ obedience constraints also limit the distortions in the allocation of information introduced by a monopolist seller; (iv) as competition becomes fiercer, these limitations become more severe, weakening the impact of market power on the allocation of information.