The Design and Price of Information
52 Pages Posted: 25 Jul 2016
Date Written: July 2016
This paper analyzes the trade of information between a data buyer and a data seller. The data buyer faces a decision problem under uncertainty and seeks to augment his initial private information with supplemental data. The data seller is uncertain about the willingness-to-pay of the data buyer due to this private information. The data seller optimally offers a menu of (Blackwell) experiments as statistical tests to the data buyer.
The seller exploits differences in the beliefs of the buyer's types to reduce information rents while limiting the surplus that must be sacrificed to provide incentives.
Keywords: experiments, mechanism design, price discrimination, product differentiation., selling information
JEL Classification: D42, D82, D83
Suggested Citation: Suggested Citation