Working Paper: CEPR ID: DP16459
Authors: Dirk Bergemann; Marco Ottaviani
Abstract: As large amounts of data become available and can be communicated more easily and processed more effectively, information has come to play a central role for economic activity and welfare in our age. This essay overviews contributions to the industrial organization of information markets and nonmarkets, while attempting to maintain a balance between foundational frameworks and more recent developments. We start by reviewing mechanism-design approaches to modeling the trade of information. We then cover ratings, predictions, and recommender systems. We turn to forecasting contests, prediction markets, and other institutions designed for collecting and aggregating information from decentralized participants. Finally, we discuss science as a prototypical information nonmarket with participants who interact in a non-anonymous way to produce and disseminate information. We aim to make the reader familiar with the central notions and insights in this burgeoning literature and also point to some open critical questions that future research will have to address.
Keywords: information; data; data intermediaries; information markets; information nonmarkets; science
JEL Codes: D82; D83; D84; G14; L86
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| availability of data (C81) | efficiency of markets (G14) |
| institutional design (D02) | market efficiency (G14) |
| data collection and analysis (C80) | economic decision-making (D87) |
| information goods characteristics (L86) | market failures (D52) |