Information Sale on Network

Abstract

This paper studies a stylized model of a monopoly data seller when information-sharing network exists among data buyers. We show that, if the buyers' prior information is sufficiently noisy, the optimal selling strategy is characterized by a maximum independent set, which is the largest set of buyers who do not have information-sharing link at all. In addition, the precision of the seller's data decreases in the number of information-sharing links among buyers, but it is higher than the socially efficient level of precision.