Providing Data Samples for Free

41 Pages Posted: 29 Jun 2020 Last revised: 30 Aug 2021

See all articles by Kimon Drakopoulos

Kimon Drakopoulos

University of Southern California

Ali Makhdoumi

Fuqua School of Business; Massachusetts Institute of Technology (MIT)

Date Written: May 26, 2020


We consider the problem of a Seller of data who sells information to a Buyer regarding an unknown (to both parties) state of the world. Traditionally, the literature explores one-round strategies for selling information due to the Seller's holdup problem: once a portion of the dataset is released, the Buyer's estimate improves, and as a result, the value of the remaining dataset drops. In this paper, we show that this intuition is true when the Buyer's objective is to improve the precision of her estimate. On the other hand, we establish that when the Buyer's objective is to improve downstream operational decisions (e.g., better pricing decisions in a market with unknown elasticity) and when the Buyer's initial estimate is misspecified, one-round strategies are outperformed by selling strategies that initially provide free samples. In particular, we provide conditions under which such free-sample strategies generate strictly higher revenues than static strategies and illustrate the benefit of providing data samples for free through a series of examples. Furthermore, we characterize the optimal dynamic pricing strategy within the class of strategies that provide samples over time (at a constant rate), charging a flow price until some time when the rest of the dataset is released at a lump-sum amount.

Keywords: Selling Data Samples, Selling Information, Pricing, Bayesian Learning, Brownian Motion

Suggested Citation

Drakopoulos, Kimon and Makhdoumi, Ali, Providing Data Samples for Free (May 26, 2020). USC Marshall School of Business Research Paper, Available at SSRN: or

Kimon Drakopoulos (Contact Author)

University of Southern California ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

Ali Makhdoumi

Fuqua School of Business ( email )

Box 90120
Durham, NC 27708-0120
United States

HOME PAGE: http://

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Do you have negative results from your research you’d like to share?

Paper statistics

Abstract Views
PlumX Metrics