Welfare effects of data intermediaries
Loading...
URL
Journal Title
Journal ISSN
Volume Title
School of Business |
Master's thesis
Authors
Date
Department
Major/Subject
Mcode
Degree programme
Language
en
Pages
73 + 8
Series
Abstract
This thesis is a literature review on data intermediaries and their impact on welfare creation and division in information markets. By examining interactions between consumers, companies, and intermediaries, I argue that even though intermediaries have potential to transmit socially beneficial data, information markets rarely work efficiently. Instead, intermediaries run data trade to maximize their own utility. Furthermore, I note that their welfare outcomes are highly linked to information collection’s impact on consumer behavior. The survey’s main emphasis is on analyzing the information market models by Ball (2020) and Bergemann, Bonatti and Gan (2020). The former framework is used to illustrate how consumers’ strategic behavior may lead to market inefficiencies as data manipulation induces agents to make sub-optimal decisions. An intermediary can influence consumers’ incentives for data distortion by committing to specific information use and thereby potentially improve the market outcome. The latter model discusses how intermediary’s ability to use other consumers’ data to infer new information about similar consumers creates an information externality. As a result, an intermediary needs to compensate only a portion of the true value of consumers’ data. Moreover, I demonstrate that information externality may allow intermediaries to engage in socially harmful data trade.Description
Thesis advisor
Välimäki, JuusoMurto, Pauli