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Robust Regulation of Firms' Access to Consumer Data

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  • Jose Higueras

Abstract

In this paper I study how to regulate firms' access to consumer data when the latter is used for price discrimination and the regulator faces non-Bayesian uncertainty about the correlation structure between data and willingness to pay, and hence about the way the monopolist will use the consumers' information to segment the market. I fully characterize all policies that are worst-case optimal when the regulator maximizes consumer surplus: the regulator allows the monopolist to access data if the monopolist cannot use the database to identify a small group of consumers. Furthermore, from the set of policies that achieve the largest worst-case consumer surplus, I identify the ones that are undominated; i.e., there is no alternative policy that never yields lower consumer surplus, and sometimes strictly higher consumer surplus.

Suggested Citation

  • Jose Higueras, 2023. "Robust Regulation of Firms' Access to Consumer Data," Papers 2305.05822, arXiv.org, revised Mar 2024.
    • Handle: RePEc:arx:papers:2305.05822
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    References listed on IDEAS

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    1. Pram, Kym, 2021. "Disclosure, welfare and adverse selection," Journal of Economic Theory, Elsevier, vol. 197(C).
    2. Yingni Guo & Eran Shmaya, 2019. "Robust Monopoly Regulation," Papers 1910.04260, arXiv.org.
    3. Dirk Bergemann & Alessandro Bonatti, 2019. "Markets for Information: An Introduction," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 85-107, August.
    4. Gabriel Carroll, 2017. "Robustness and Separation in Multidimensional Screening," Econometrica, Econometric Society, vol. 85, pages 453-488, March.
    5. Piotr Dworczak & Alessandro Pavan, 2022. "Preparing for the Worst but Hoping for the Best: Robust (Bayesian) Persuasion," Econometrica, Econometric Society, vol. 90(5), pages 2017-2051, September.
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