Selling Information in Games with Externalities
Fuente:
arXiv
Saved in:
| Main Authors: | , , , , |
|---|---|
| Format: | Preprint |
| Published: |
2025
|
| Subjects: | |
| Online Access: | |
| Tags: |
Add Tag
No Tags, Be the first to tag this record!
|
| _version_ | 1866918005959557120 |
|---|---|
| author | Falconer, Thomas Ratha, Anubhav Kazempour, Jalal Pinson, Pierre Kamgarpour, Maryam |
| author_facet | Falconer, Thomas Ratha, Anubhav Kazempour, Jalal Pinson, Pierre Kamgarpour, Maryam |
| contents | A competitive market is modeled as a game of incomplete information. One player observes some payoff-relevant state and can sell (possibly noisy) messages thereof to the other, whose willingness to pay is contingent on their own beliefs. We frame the decision of what information to sell, and at what price, as a product versioning problem. The optimal menu screens buyer types to maximize profit, which is the payment minus the externality induced by selling information to a competitor, that is, the cost of refining a competitor's beliefs. For a class of games with binary actions and states, we derive the following insights: (i) payments are necessary to provide incentives for information sharing amongst competing firms; (ii) the optimal menu benefits both the buyer and the seller; (iii) the seller cannot steer the buyer's actions at the expense of social welfare; (iv) as such, as competition grows fiercer it can be optimal to sell no information at all. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2505_00405 |
| institution | arXiv |
| publishDate | 2025 |
| record_format | arxiv |
| spellingShingle | Selling Information in Games with Externalities Falconer, Thomas Ratha, Anubhav Kazempour, Jalal Pinson, Pierre Kamgarpour, Maryam Computer Science and Game Theory A competitive market is modeled as a game of incomplete information. One player observes some payoff-relevant state and can sell (possibly noisy) messages thereof to the other, whose willingness to pay is contingent on their own beliefs. We frame the decision of what information to sell, and at what price, as a product versioning problem. The optimal menu screens buyer types to maximize profit, which is the payment minus the externality induced by selling information to a competitor, that is, the cost of refining a competitor's beliefs. For a class of games with binary actions and states, we derive the following insights: (i) payments are necessary to provide incentives for information sharing amongst competing firms; (ii) the optimal menu benefits both the buyer and the seller; (iii) the seller cannot steer the buyer's actions at the expense of social welfare; (iv) as such, as competition grows fiercer it can be optimal to sell no information at all. |
| title | Selling Information in Games with Externalities |
| topic | Computer Science and Game Theory |
| url | https://arxiv.org/abs/2505.00405 |