IDEAS home Printed from https://ideas.repec.org/p/arx/papers/2204.08723.html

Data Provision to an Informed Seller

Author

Listed:
  • Shota Ichihashi
  • Alex Smolin

Abstract

A monopoly seller is privately and imperfectly informed about the buyer's value of the product. The seller uses information to price discriminate the buyer. A designer offers a mechanism that provides the seller with additional information based on the seller's report about her type. We establish the impossibility of screening for welfare purposes, i.e., the designer can attain any implementable combination of buyer surplus and seller profit by providing the same signal to all seller types. We use this result to characterize the set of implementable welfare outcomes, study the seller's incentive to acquire third-party data, and demonstrate the trade-off between buyer surplus and efficiency.

Suggested Citation

  • Shota Ichihashi & Alex Smolin, 2022. "Data Provision to an Informed Seller," Papers 2204.08723, arXiv.org, revised Mar 2023.
    • Handle: RePEc:arx:papers:2204.08723
    as

    Download full text from publisher

    File URL: http://arxiv.org/pdf/2204.08723
    File Function: Latest version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Xianwen Shi & Jun Zhang, 2020. "Welfare of Price Discrimination and Market Segmentation in Duopoly," Working Papers tecipa-682, University of Toronto, Department of Economics.
    2. Alex Smolin, 2023. "Disclosure and pricing of attributes," RAND Journal of Economics, RAND Corporation, vol. 54(4), pages 570-597, December.
    3. Myerson, Roger B, 1983. "Mechanism Design by an Informed Principal," Econometrica, Econometric Society, vol. 51(6), pages 1767-1797, November.
    4. Alessandro Acquisti & Curtis Taylor & Liad Wagman, 2016. "The Economics of Privacy," Journal of Economic Literature, American Economic Association, vol. 54(2), pages 442-492, June.
    5. Andrew Rhodes & Jidong Zhou, 2024. "Personalized Pricing and Competition," American Economic Review, American Economic Association, vol. 114(7), pages 2141-2170, July.
    6. Fudenberg, Drew & Tirole, Jean, 1991. "Perfect Bayesian equilibrium and sequential equilibrium," Journal of Economic Theory, Elsevier, vol. 53(2), pages 236-260, April.
    7. Laura Doval & Alex Smolin, 2024. "Persuasion and Welfare," Journal of Political Economy, University of Chicago Press, vol. 132(7), pages 2451-2487.
    8. Anne-Katrin Roesler & Balázs Szentes, 2017. "Buyer-Optimal Learning and Monopoly Pricing," American Economic Review, American Economic Association, vol. 107(7), pages 2072-2080, July.
    9. Dirk Bergemann & Alessandro Bonatti & Tan Gan, 2022. "The economics of social data," RAND Journal of Economics, RAND Corporation, vol. 53(2), pages 263-296, June.
    10. Anton Kolotilin & Tymofiy Mylovanov & Andriy Zapechelnyuk & Ming Li, 2017. "Persuasion of a Privately Informed Receiver," Econometrica, Econometric Society, vol. 85(6), pages 1949-1964, November.
    11. Nima Haghpanah & Ron Siegel, 2023. "Pareto-Improving Segmentation of Multiproduct Markets," Journal of Political Economy, University of Chicago Press, vol. 131(6), pages 1546-1575.
    12. Andreas Kleiner & Benny Moldovanu & Philipp Strack, 2021. "Extreme Points and Majorization: Economic Applications," Econometrica, Econometric Society, vol. 89(4), pages 1557-1593, July.
    13. Emir Kamenica & Matthew Gentzkow, 2011. "Bayesian Persuasion," American Economic Review, American Economic Association, vol. 101(6), pages 2590-2615, October.
    14. Robert J. Aumann, 1995. "Repeated Games with Incomplete Information," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011476, December.
    15. S Nageeb Ali & Greg Lewis & Shoshana Vasserman, 2023. "Voluntary Disclosure and Personalized Pricing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(2), pages 538-571.
    16. Smolin, Alex & Doval, Laura, 2021. "Information Payoffs: An Interim Perspective," CEPR Discussion Papers 16543, C.E.P.R. Discussion Papers.
    17. In-Koo Cho & David M. Kreps, 1987. "Signaling Games and Stable Equilibria," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 102(2), pages 179-221.
    18. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
    19. Alonso, Ricardo & Câmara, Odilon, 2016. "Bayesian persuasion with heterogeneous priors," Journal of Economic Theory, Elsevier, vol. 165(C), pages 672-706.
    20. Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
    21. Simone Galperti & Aleksandr Levkun & Jacopo Perego, 2024. "The Value of Data Records," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 91(2), pages 1007-1038.
    22. Kai Hao Yang, 2022. "Selling Consumer Data for Profit: Optimal Market-Segmentation Design and Its Consequences," American Economic Review, American Economic Association, vol. 112(4), pages 1364-1393, April.
    23. Baron, David P & Myerson, Roger B, 1982. "Regulating a Monopolist with Unknown Costs," Econometrica, Econometric Society, vol. 50(4), pages 911-930, July.
    24. Choi, Jay Pil & Jeon, Doh-Shin & Kim, Byung-Cheol, 2019. "Privacy and personal data collection with information externalities," Journal of Public Economics, Elsevier, vol. 173(C), pages 113-124.
    25. Shota Ichihashi, 2020. "Online Privacy and Information Disclosure by Consumers," American Economic Review, American Economic Association, vol. 110(2), pages 569-595, February.
    26. Roger B. Myerson & Philip J. Reny, 2020. "Perfect Conditional ε‐Equilibria of Multi‐Stage Games With Infinite Sets of Signals and Actions," Econometrica, Econometric Society, vol. 88(2), pages 495-531, March.
    27. Justin P. Johnson & David P. Myatt, 2003. "Multiproduct Quality Competition: Fighting Brands and Product Line Pruning," American Economic Review, American Economic Association, vol. 93(3), pages 748-774, June.
    28. Dirk Bergemann & Alessandro Bonatti & Alex Smolin, 2018. "The Design and Price of Information," American Economic Review, American Economic Association, vol. 108(1), pages 1-48, January.
    29. Nima Haghpanah & Ron Siegel, 2022. "The Limits of Multiproduct Price Discrimination," American Economic Review: Insights, American Economic Association, vol. 4(4), pages 443-458, December.
    30. Dirk Bergemann & Benjamin Brooks & Stephen Morris, 2015. "The Limits of Price Discrimination," American Economic Review, American Economic Association, vol. 105(3), pages 921-957, March.
    31. Luis Rayo & Ilya Segal, 2010. "Optimal Information Disclosure," Journal of Political Economy, University of Chicago Press, vol. 118(5), pages 949-987.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arieli, Itai & Babichenko, Yakov & Madmon, Omer & Tennenholtz, Moshe, 2025. "Robust price discrimination," Games and Economic Behavior, Elsevier, vol. 154(C), pages 377-395.
    2. Andrew Rhodes & Jidong Zhou, 2024. "Personalized Pricing and Competition," American Economic Review, American Economic Association, vol. 114(7), pages 2141-2170, July.
    3. Roland Strausz, 2024. "Correlation‐savvy sellers," RAND Journal of Economics, RAND Corporation, vol. 55(2), pages 266-291, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ichihashi, Shota & Smolin, Alex, 2022. "Data Collection by an Informed Seller," CEPR Discussion Papers 17239, C.E.P.R. Discussion Papers.
    2. Dirk Bergemann & Alessandro Bonatti, 2024. "Data, Competition, and Digital Platforms," American Economic Review, American Economic Association, vol. 114(8), pages 2553-2595, August.
    3. Alireza Fallah & Michael I. Jordan & Ali Makhdoumi & Azarakhsh Malekian, 2024. "The Limits of Price Discrimination Under Privacy Constraints," Papers 2402.08223, arXiv.org, revised Jun 2024.
    4. Jiadong Gu, 2024. "Data Trade and Consumer Privacy," Papers 2406.12457, arXiv.org, revised Jan 2026.
    5. Ichihashi, Shota, 2021. "The economics of data externalities," Journal of Economic Theory, Elsevier, vol. 196(C).
    6. Alessandro Bonatti, 2023. "The Platform Dimension of Digital Privacy," NBER Chapters, in: The Economics of Privacy, pages 73-96, National Bureau of Economic Research, Inc.
    7. Dirk Bergemann & Stephen Morris, 2019. "Information Design: A Unified Perspective," Journal of Economic Literature, American Economic Association, vol. 57(1), pages 44-95, March.
    8. Hedlund, Jonas, 2017. "Bayesian persuasion by a privately informed sender," Journal of Economic Theory, Elsevier, vol. 167(C), pages 229-268.
    9. Delbono, Flavio & Reggiani, Carlo & Sandrini, Luca, 2024. "Strategic data sales with partial segment profiling," Information Economics and Policy, Elsevier, vol. 68(C).
    10. Mark Armstrong & Jidong Zhou, 2022. "Consumer Information and the Limits to Competition," American Economic Review, American Economic Association, vol. 112(2), pages 534-577, February.
    11. Dirk Bergemann & Tibor Heumann & Stephen Morris, 2022. "Screening with Persuasion," Cowles Foundation Discussion Papers 2338, Cowles Foundation for Research in Economics, Yale University.
    12. Yang, Kai Hao, 2021. "Efficient demands in a multi-product monopoly," Journal of Economic Theory, Elsevier, vol. 197(C).
    13. Maryam Saeedi & Ali Shourideh, 2020. "Optimal Rating Design under Moral Hazard," Papers 2008.09529, arXiv.org, revised Jan 2026.
    14. Flavio Pino, 2022. "The microeconomics of data – a survey," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(3), pages 635-665, September.
    15. Zhou, Jidong, 2021. "Mixed bundling in oligopoly markets," Journal of Economic Theory, Elsevier, vol. 194(C).
    16. Mert Demirer & Diego Jimenez-Hernandez & Dean Li & Sida Peng, 2024. "Data, Privacy Laws and Firm Production: Evidence from the GDPR," Working Paper Series WP 2024-02, Federal Reserve Bank of Chicago.
    17. Bergemann, Dirk & Ottaviani, Marco, 2021. "Information Markets and Nonmarkets," CEPR Discussion Papers 16459, C.E.P.R. Discussion Papers.
    18. Chan, Jimmy & Gupta, Seher & Li, Fei & Wang, Yun, 2019. "Pivotal persuasion," Journal of Economic Theory, Elsevier, vol. 180(C), pages 178-202.
      • Jimmy Chan & Seher Gupta & Fei Li & Yun Wang, 2018. "Pivotal Persuasion," Working Papers 2018-11-03, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    19. Arlindo Skenderaj, 2025. "Selling supplemental information," Papers 2511.14103, arXiv.org, revised Feb 2026.
    20. S Nageeb Ali & Greg Lewis & Shoshana Vasserman, 2023. "Voluntary Disclosure and Personalized Pricing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(2), pages 538-571.

    More about this item

    JEL classification:

    • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:arx:papers:2204.08723. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: arXiv administrators (email available below). General contact details of provider: http://arxiv.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.