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The economics of social data

Bergemann, Dirk, Bonatti, Alessandro and Gan, Tan ORCID: 0000-0002-9483-7869 (2022) The economics of social data. RAND Journal of Economics, 53 (2). pp. 263-296. ISSN 0741-6261

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Identification Number: 10.1111/1756-2171.12407

Abstract

A data intermediary acquires signals from individual consumers regarding their preferences. The intermediary resells the information in a product market wherein firms and consumers tailor their choices to the demand data. The social dimension of the individual data—whereby a consumer's data are predictive of others' behavior—generates a data externality that can reduce the intermediary's cost of acquiring the information. The intermediary optimally preserves the privacy of consumers' identities if and only if doing so increases social surplus. This policy enables the intermediary to capture the total value of the information as the number of consumers becomes large.

Item Type: Article
Additional Information: © 2022 The RAND Corporation
Divisions: LSE
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences
JEL classification: D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis
C - Mathematical and Quantitative Methods > C8 - Data Collection and Data Estimation Methodology; Computer Programs > C80 - General
Date Deposited: 12 Sep 2024 09:21
Last Modified: 07 Nov 2024 23:39
URI: http://eprints.lse.ac.uk/id/eprint/125398

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