2023/02/01 by Ronen Gradwohl, Gradwohl, Ronen, Moshe Tennenholtz +1 · 1 citation
Business, Management and Accounting · Decision Sciences · Social Sciences · #Auction Theory and Applications #Computer Science and Game Theory (cs.GT) #Consumer Market Behavior and Pricing #Experimental Behavioral Economics Studies #FOS: Computer and information sciences #FOS: Economics and business #Theoretical Economics (econ.TH)
paper · pdf · doi:10.48550/arxiv.2302.00285
openalex publication_date 2023/02/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/30
We study the costs and benefits of selling data to a competitor. Although selling all consumers' data may decrease total firm profits, there exist other selling mechanisms -- in which only some consumers' data is sold -- that render both firms better off. We identify the profit-maximizing mechanism, and show that the benefit to firms comes at a cost to consumers. We then construct Pareto-improving mechanisms, in which each consumers' welfare, as well as both firms' profits, increase. Finally, we show that consumer opt-in can serve as an instrument to induce firms to choose a Pareto-improving mechanism over a profit-maximizing one.