Download This PaperAdvertising and Voter Data in Asymmetric Political Contests
39 Pages Posted: 22 Sep 2018 Last revised: 7 Apr 2020
Date Written: August 7, 2019
Abstract
We study a political contest where two candidates advertise on a platform to persuade voters to vote in their favor. Voters a priori favor one of the candidates. The extent of a candidate's favorability can be ascertained by a data intermediary who can decide to sell this information to one, both or neither of the candidates. We contrast the intermediary's incentives for selling information with the platform's incentives for maximizing candidates' advertising expenditures, and show that the two are always at conflict. Our findings suggest that tensions may exist between social-media platforms, which often generate data that an intermediary may collect, and an intermediary whose data sale choice can lower the platform's profit from advertisements. We characterize conditions under which the intermediary can influence the outcome of the contest.
Keywords: platform, intermediary, information asymmetry, asymmetric contest
JEL Classification: D80, D72
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