Markets for Information: An Introduction

Posted: 4 Sep 2019

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

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Date Written: August 2019

Abstract

We survey a recent and growing literature on markets for information. We offer a comprehensive view of information markets through an integrated model of consumers, information intermediaries, and firms. The model embeds a large set of applications ranging from sponsored-search advertising to credit scores to information sharing among competitors. We then zoom in to one of the critical elements in the markets for information: the design of the information. We distinguish between ex ante sales of information (the buyer acquires an information structure) and ex post sales (the buyer pays for specific realizations). We relate this distinction to the different products that brokers, advertisers, and publishers use to trade consumer information online. We discuss the endogenous limits to the trade of information that derive from the potential adverse use of information to the consumers. Finally, we discuss recommender systems and other information filtering systems that use artificial intelligence to predict ratings or preferences in markets for indirect information.

Suggested Citation

Bergemann, Dirk and Bonatti, Alessandro, Markets for Information: An Introduction (August 2019). Annual Review of Economics, Vol. 11, pp. 85-107, 2019. Available at SSRN: https://ssrn.com/abstract=3445910 or http://dx.doi.org/10.1146/annurev-economics-080315-015439

Dirk Bergemann

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

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Alessandro Bonatti (Contact Author)

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

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