Selling Information in Competitive Environments
Abstract
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.
Cite
@article{arxiv.2202.08780,
title = {Selling Information in Competitive Environments},
author = {Alessandro Bonatti and Munther Dahleh and Thibaut Horel and Amir Nouripour},
journal= {arXiv preprint arXiv:2202.08780},
year = {2024}
}