 A data intermediary pays consumers for information about their preferencesand sells the information so acquired to firms that use it to tailor their products and prices . The social dimension of the individual data---whereby an individual's data are predictive of the behavior of others---generates a data externality that reduces the intermediary's cost of acquiring  information. We derive the intermediary's optimal data policy and show that it preserves the privacy of the consumers' identities while providing precise information about market demand to the firms. This  enables the intermediary to capture the entire value of information as the number of consumers grows large.
We propose a model of data intermediation to analyze the incentives for sharing individual data in the presence of informational externalities. A data intermediary acquires signals from individual consumers regarding their preferences. The intermediary resells the information in a product market wherein firms and consumers can tailor their choices to the demand data . The social dimension of the individual data-whereby an individual's data are predictive of the behavior of others -- generates a data externality that can reduce the intermediary's cost of acquiring the information. We derive the intermediary's optimal data policy and establish that it preserves the privacy of consumer identities while providing precise information about market demand to the firms. This policy enables the intermediary to capture the total value of the information as the number of consumers becomes large.
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We propose a model of data intermediation to analyze the incentives for sharing individual data in the presence of informational externalities.
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pays consumers for information about their preferencesand sells the information so acquired to firms that use it to tailor their products and prices
acquires signals from individual consumers regarding their preferences. The intermediary resells the information in a product market wherein firms and consumers can tailor their choices to the demand data
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data---whereby
data-whereby
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others---generates
others -- generates
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reduces
can reduce
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the
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show
establish
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the consumers'
consumer
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policy
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entire value of
total value of the
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grows
becomes