Index

Lecture series are sponsored by

April 23, 2014: Prof. Itay Fainmesser (Brown University)

Abstract: The business model of companies such as Facebook, MySpace, and Twitter, relies on monetizing the information on the interactions and influences of their users. How valuable is such information, and is its use beneficial or detrimental for consumer welfare? We study these questions in a model where a monopoly sells a network good and may price discriminate using network information: information on consumers influences and/or on consumers susceptibilities to influence. Our framework incorporates a rich set of market products, including goods characterized by global and local network effects. We derive results on the value of network information and determine under which conditions, relative to uniform price, consumer surplus increases. We demonstrate the applicability of our framework using survey data on various types of relationships.
[link to the paper]

Biography: Itay Fainmesser is an Assistant Professor of Economics at Brown University. Itay received his Ph.D. in Business Economics from Harvard University in 2010, and an M.A in Economics (2006) and B.Sc. in Computer Science and Economics (2005) from the Tel Aviv University. Itay studies how social networks affect and are affected by market activities and market rules. His current work explores the optimal pricing of network goods, the role of intermediaries in markets, and the shape and evolution of trust networks. Itay is a Visiting Assistant Professor of Economics at Stanford University during the 2013-2014 academic year, and will be an Assistant Professor at The Johns Hopkins University starting fall 2014.