DP13148 Markets for Information: An Introduction

Author(s): Dirk Bergemann, Alessandro Bonatti
Publication Date: August 2018
Keyword(s): information design, information markets, intermediaries, mechanism design, predictions, ratings 
JEL(s): D42, D82, D83
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13148

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 review a mechanism design approach to selling information in greater detail. 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 its potential adverse use for consumers. Finally we revisit the role of recommender systems and artificial intelligence systems as markets for indirect information.