The Design and Price of Information

63 Pages Posted: 6 Jun 2017

See all articles by Dirk Bergemann

Dirk Bergemann

Yale University - Cowles Foundation - Department of Economics; Yale University - Cowles Foundation

Alessandro Bonatti

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Alex Smolin

University of Bonn

Multiple version iconThere are 3 versions of this paper

Date Written: June 3, 2017

Abstract

A data buyer faces a decision problem under uncertainty. He can augment his initial private information with supplemental data from a data seller. His willingness to pay for supplemental data is determined by the quality of his initial private information. The data seller optimally offers a menu of statistical experiments. We establish the properties that any revenue-maximizing menu of experiments must satisfy. Every experiment is a non-dispersed stochastic matrix, and every menu contains a fully informative experiment. In the cases of binary states and actions, or binary types, we provide an explicit construction of the optimal menu of experiments.

Keywords: Information design, Price of information, Statistical experiments, Mechanism design, Price discrimination, Hypothesis testing

JEL Classification: D42, D82, D83

Suggested Citation

Bergemann, Dirk and Bonatti, Alessandro and Smolin, Alex, The Design and Price of Information (June 3, 2017). Cowles Foundation Discussion Paper No. 2049R. Available at SSRN: https://ssrn.com/abstract=2981406 or http://dx.doi.org/10.2139/ssrn.2981406

Dirk Bergemann (Contact Author)

Yale University - Cowles Foundation - Department of Economics ( email )

28 Hillhouse Ave
New Haven, CT 06520-8268
United States
203-432-3592 (Phone)
203-432-2128 (Fax)

HOME PAGE: http://www.econ.yale.edu/~dirk/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Alessandro Bonatti

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

Alex Smolin

University of Bonn ( email )

37 Lennestr.
Bonn, ‎North Rhine-Westphalia 53113
Germany

HOME PAGE: http://sites.google.com/site/alexeyvsmolin/

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