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Data Linkages and Incentives
Many organizations, such as banks and insurers, determine what services to offer based on a perceived quality of the recipient, e.g. their creditworthiness. Increasingly, organizations have access to new data about consumers, such as categorizations into demographic and lifestyle segments. When organizations learn about a consumer’s quality from the behavior of other consumers in the same segment—creating data linkages—what are the consequences for each consumer’s incentives to exert effort, e.g. to maintain a good credit rating? We study a multiple-agent career concerns model in which agents choose whether to interact with a principal and how much costly effort to exert. Data linkages create informational externalities across consumers, shaping participation rates and effort provision in equilibrium. We show that whether these are welfare-improving depends crucially on whether linkages are about quality (revealing correlations in underlying types) or about a shared circumstance (helping the principal to de-bias shared shocks to observed outcomes).
Please sign up for meetings here: docs.google.com/spreadsheets/d/1Tf4YtDeDdmv3Dv379EyhWTL6lszs2Dy6yiff7yJeJAY/edit#gid=0
Date:
6 March 2020, 14:15
Venue:
Manor Road Building, Manor Road OX1 3UQ
Venue Details:
Seminar Room A
Speaker:
Annie Liang (University of Pennsylvania)
Organising department:
Department of Economics
Part of:
Nuffield Economic Theory Seminar
Booking required?:
Not required
Audience:
Members of the University only
Editor:
Melis Clark
