How to Sell a Dataset? Pricing Policies for Data Monetization

49 Pages Posted: 19 Feb 2019 Last revised: 8 Oct 2020

See all articles by Sameer Mehta

Sameer Mehta

University of Illinois at Urbana-Champaign - College of Business

Milind Dawande

University of Texas at Dallas - Department of Information Systems & Operations Management

Ganesh Janakiraman

University of Texas at Dallas - Naveen Jindal School of Management

Vijay Mookerjee

University of Texas at Dallas - Naveen Jindal School of Management

Date Written: August 1, 2019

Abstract

The wide variety of pricing policies used in practice by data-sellers suggests that there are significant challenges in pricing datasets. In this paper, we develop a utility framework that is appropriate for data-buyers and the corresponding pricing of the data by the data-seller. A buyer interested in purchasing a dataset has private valuations in two aspects -- her ideal record that she values the most, and the rate at which her valuation for the records in the dataset decays as they differ from her ideal record. The seller allows individual buyers to filter the dataset and select the records that are of interest to them. The multi-dimensional private information of the buyers coupled with the endogenous selection of records makes the seller's problem of optimally pricing the dataset a challenging one. We formulate a tractable model and successfully exploit its special structure to obtain optimal and near-optimal data-selling mechanisms. Specifically, we provide insights into the conditions under which a commonly-used mechanism -- namely, a price-quantity schedule -- is optimal for the data-seller. When the conditions leading to the optimality of a price-quantity schedule do not hold, we show that the optimal price-quantity schedule offers an attractive worst-case guarantee relative to an optimal mechanism. Further, we numerically solve for the optimal mechanism and show that the actual performance of two simple and well-known price-quantity schedules -- namely, two-part tariff and two-block tariff -- is near-optimal. We also quantify the value to the seller from allowing buyers to filter the dataset.

Keywords: Data Monetization, Multi-Dimensional Mechanism Design, Price-Quantity Schedules, Worst-Case Guarantees

JEL Classification: C61, D44, D82, D47

Suggested Citation

Mehta, Sameer and Dawande, Milind and Janakiraman, Ganesh and Mookerjee, Vijay, How to Sell a Dataset? Pricing Policies for Data Monetization (August 1, 2019). Available at SSRN: https://ssrn.com/abstract=3333296 or http://dx.doi.org/10.2139/ssrn.3333296

Sameer Mehta (Contact Author)

University of Illinois at Urbana-Champaign - College of Business ( email )

Champaign, IL 61820
United States

Milind Dawande

University of Texas at Dallas - Department of Information Systems & Operations Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Ganesh Janakiraman

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Vijay Mookerjee

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

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