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“Using Data Science in Competition Enforcement and Platform Regulation” forthcoming in European Competition Journal
Competition authorities in Europe and beyond have started to rely on data science to monitor markets and to check compliance with the applicable rules. The Digital Markets Act and the Digital Services Act have made the use of data science among regulators even more relevant considering the scale and complexity of the monitoring that is required.
In work done for the expert group to the EU Observatory on the Online Platform Economy, “Charting a Way Forward for the Use of Data Science in Competition Enforcement and Platform Regulation” (joint with Inge Graef and Ulrich Laitenberger), we study the range of data science tools that is already available to competition authorities and other regulators. We reflect on the promises and challenges of the future uptake of data science tools and discuss how data science expertise can be integrated into regulatory agencies. The existing use of data science shows that regulators are capable of adjusting their organizations and processes to reap the potential of employing technology tools in their activities. At the same time, the future uptake of data science comes with challenges relating to the reliability of data and the privacy of individuals. Beyond involvement in specific investigations, data science also carries the potential of reforming the work of regulators by moving towards a more proactive form of enforcement. Exchanging data science expertise and tools across regulators deserves to be further facilitated to increase collaboration and share resources.
The paper will be published soon in the European Competition Journal.
“Consumers’ Privacy Choices in the Era of Big Data” forthcoming in Games and Economic Behavior
In 2013, Edward Snowden shocked the world by revealing large surveillance programs of US intelligence services. In 2012, Sebastian Dengler and I had started to think about privacy from an economic perspective. Of course, we were not the only ones, as this interim review article shows. It turned out to be a hard task to trade off the costs and benefits of privacy against other goods. Therefore, we are very happy that this work has now borne fruit.
Our paper, “Consumers’ Privacy Choices in the Era of Big Data” (working paper version), has just been accepted for publication in Games and Economic Behavior. There, combining Industrial Organization, Behavioral Economics, and insights about digital markets, we start from the observation that recent progress in information technologies provides sellers with detailed knowledge about consumers’ preferences, approaching perfect price discrimination in the limit. We construct a model where consumers with less strategic sophistication than the seller’s pricing algorithm face a trade-off when buying. They choose between a direct, transaction cost-free sales channel and a privacy-protecting, but costly, anonymous channel. We show that the anonymous channel is used even in the absence of an explicit taste for privacy if consumers are not too strategically sophisticated. This provides a micro-foundation for consumers’ privacy choices. Some consumers benefit but others suffer from their anonymization.
Jens Prüfer 