Work

Selling Cookies

Year: 2015

Type: article

Abstract: We propose a model of data provision and data pricing. A single data provider controls a large database that contains information about the match value between individual consumers and individual firms (advertisers). Advertisers seek to tailor their spending to the individual match value. The data provider prices queries about individual consumers' characteristics (cookies). We determine the equilibrium data acquisition and pricing policies. Advertisers choose positive and/or negative targeting policies. The optimal query price influences the composition of the targeted set. The price of data decreases with the reach of the database and increases with the fragmentation of data sales. (JEL C78, D83, L11, L82, M37)

Source: American Economic Journal Microeconomics

DOI: 10.1257/mic.20140155

Authors: Dirk Bergemann, Alessandro Bonatti

Institutions: Yale University, Massachusetts Institute of Technology

Language: English

Topic: Digital Platforms and Economics

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: bronze

Funder: National Science Foundation

Awards: Collaborative Research: Robust Predictions In Games With Private Information, ICES: Small: Collaborative Research: Interaction, Information and Identification