Discussion Paper Details

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Title: The Design and Price of Information

Author(s): Dirk Bergemann, Alessandro Bonatti and Alex Smolin

Publication Date: July 2016

Keyword(s): experiments, mechanism design, price discrimination, product differentiation and selling information

Programme Area(s): Industrial Organization

Abstract: 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.

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Bibliographic Reference

Bergemann, D, Bonatti, A and Smolin, A. 2016. 'The Design and Price of Information'. London, Centre for Economic Policy Research.