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Micro Theory Work in Progress

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Wed 25 May, '22
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CRETA Theory Seminar - Nima Haghpanah
S2.79

Title: A Cooperative Theory of Market Segmentation by Consumers

Abstract: We consider a market that may be segmented and is served by a single seller. The surplus of each consumer in a segment depends on the price that the seller optimally charges, and this optimal price depends on the set of consumers in that segment. This gives rise to a novel cooperative game between consumers that determines market segmentation. We study several solution concepts. The most demanding solution concept, the core, requires that there is no objection to the segmentation by a coalition of consumers who benefit by forming a new segment. We show that the core is empty except for trivial cases. We then introduce a new solution concept, stability. A segmentation is stable if for each possible objection by a coalition, there is a counter-objection by a coalition in the original segmentation. We characterize stable segmentations as ones that are efficient and ``saturated,'' which means that the segments are maximal in some sense. We use this characterization to constructively show that stable segmentations exist. Even though stable segmentations are efficient, they need not maximize average consumer surplus, and segmentations that maximize average consumer surplus need not be stable. Our weakest solution concept, fragmentation-proofness, rules out objections by coalitions that include consumers from more than one segment. We show that a segmentation is fragmentation-proof if and only if it is efficient.

This is joint work with Ron Siegel.

Wed 1 Jun, '22
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CRETA Theory Seminar - Jacopo Perego
S2.79

Title: The Value of Data Records (with Simone Galperti & Aleksandr Levkun)

Abstract: Many online platforms intermediate trade between sellers and buyers using data records of the buyers' personal characteristics. How much value do such intermediaries derive from each record? Is this value higher for specific buyers? What are its properties? We find that an important component of the value of a data record is a novel externality that arises when a platform pools records to withhold information from the sellers. Ignoring this externality can significantly bias our understanding of the value of data records. We then characterize a platform's willingness to pay for more data, thereby establishing a series of basic properties of the demand side of data markets. Our analysis combines modern information design with classic duality methods and applies to a large class of principal-agent problems.

Wed 8 Jun, '22
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CRETA Theory Seminar - Eliot Lipnowski
S2.77 Cowling Room

Title to be advised.

Wed 15 Jun, '22
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CRETA Theory Seminar - Pablo Schenone
S2.77 Cowling Room

Title to be advised.