One-line summary:
PRIVDIMA investigates the regulation of data privacy to mitigate consumer harm from excessive price discrimination in digital markets, with particular emphasis on data's verifiability properties.
Core Innovation and Motivation:
This project diverges from existing literature by explicitly modeling data's verifiability effect—a fundamental yet overlooked mechanism in privacy regulation analysis. The theoretical foundation rests on four key observations: (1) digital data collection transforms private information into verifiable information; (2) through unraveling mechanisms, this verifiability fundamentally alters regulatory equilibria; (3) current privacy regulation literature abstracts away from verifiability effects; and (4) regulatory frameworks that ignore these effects generate suboptimal policy outcomes.
Research Objectives:
Objective 1: Theoretical Foundation Integrate verifiability mechanisms into established mechanism design and information design frameworks, extending their analytical scope to address previously intractable problems where information verifiability creates distinct strategic interactions.
Objective 2: Regulation of Data Use Derive policy implications for data privacy regulation through restrictions on data utilization in price discrimination. This objective generates novel insights for both dynamic contracting environments and static behavior-based price discrimination models, examining how regulatory constraints on data use affect market outcomes and consumer welfare.
Objective 3: Regulation of Data Collection Develop policy frameworks for regulating data collection itself, focusing on preventing information unraveling processes that amplify the welfare-reducing effects of data verifiability on consumers.
Expected Impact:
Objective 1 represents a significant theoretical contribution to mechanism design and information economics, expanding the analytical toolkit for studying digital market phenomena. Objectives 2 and 3 address the pressing policy challenge of ensuring consumers capture welfare gains from digitalization while preventing exploitative practices. This dual approach promotes both allocative efficiency and distributional equity, potentially enhancing public acceptance of digital transformation and reducing social tensions around technological adoption.
Roland Strausz (HU Berlin)
Willy Lefez (HU Berlin)
Vincent Meisner (HU Berlin)
Jiawei Zhang (HU Berlin)
Paul Rosmer (HU Berlin)
Andreas Asseyer (FU Berlin)
Daniel Krähmer (Bonn University)
Anne-Katrin Roesler (University of Toronto)
Sebastian Schweighofer-Kodritsch (HU Berlin)
Ran Weksler (Hebrew University Jerusalem)
5 years: 10/2023-09/2028
1.8 million euros
"Consumer Consent Regulation" German Economic Review, 2025, (Roland Strausz) (doi: 10.1515/ger-2024-0124) (Open access)
Abstract: Consumer consent regulation is the cornerstone of modern data privacy regulation such as the European GDPR and the Californian CCPA. By ensuring that consumers can reject any harmful data collection, the regulation seems an effective tool for protecting consumers against price discrimination. By contrast, I provide the insight that consent regulation alone is ineffective because it provides firms with the loophole to commit to unattractive offers to dissenting consumers. Effective consent regulation therefore requires an explicit regulation of the firm’s dissent offer. This is informationally demanding; regulation that merely insists on “reasonable” (sequential rational) offers is ineffective.
lighter INSIGHTS version
working paper version (November 2024)
"Dynamic Screening with Liquidity Constraints" (Daniel Krähmer and Roland Strausz) Economic Theory, 2024 (doi:10.1007/s00199-024-01616-2) (Open Access)
Abstract: We consider a dynamic screening model with serially independent types where the agent is short-term liquidity constrained. We model a liquidity constraint as a hard constraint that forces the agent to renege whenever he would suffer a loss from fulfilling the contract terms in a given period. In particular, the violation of a liquidity constraint is a verifiable event that future contract terms can condition on. This verifiability leads to less stringent truth-telling constraints than those considered in the existing literature. We show that the weaker constraints do not affect optimal contracting, however. Moreover, we develop a novel method to study private values settings with continuous types and show that a regularity condition that has analogues in the literature on multi-dimensional screening ensures that the optimal contract is deterministic.
"Unidirectional incentive compatibility" (with Daniel Krähmer) Journal of Economic Theory (2025). (doi: 10.1016/j.jet.2025.106051) (Open access)
Abstract: We study unidirectional incentive compatibility which incentivizes an agent to report truthfully when she can misrepresent private information in one direction only. In the canonical setting with continuous, one-dimensional private information, and quasi-linear utility, unidirectional incentive compatibility imposes no restrictions on the allocation rule and holds if and only if the change of the agent’s information rent function respects a lower bound that is based on the allocation rule’s monotone envelope. In monopolistic screening models with strong interdependent values or with countervailing incentives, optimal contracts differ from optimal bidirectionally incentive compatible contracts, possibly displaying non-monotone allocations.
working paper (April, 2024)
video presentation (May, 2024)
slides (December 2023)
Informative Certification: Screening vs. Acquisition (Gorkem Celik and Roland Strausz), R&R Review of Economic Studies
Abstract: We study monopolistic certification in a buyer-seller relationship, explicitly distinguishing between its role as a device for screening versus acquisition. As a screening device, certification discloses soft information about a seller's private information. As an acquistion device, certification discloses hard information about the good's quality. Despite being costless, we show that, optimally, a monopolistic certifier provides non-maximal information-acquisition, while offering maximal screening. Thus, monopolistic certification exhibits no economic distortions as a screening device, resolving all private information, but provides too little hard information as an acquisition device. While feasible and costless, full information acquisition is suboptimal as it requires excessive information rents. Consequently, market inefficiencies remain due to market uncertainty but not due to private information.
video presentation (March, 2025)
slides (updated to March, 2025)
working paper version (January, 2025)
This paper supercedes our earlier paper "Selling Certification of Private and Market Information"
Principled Mechanism Design with Evidence (Sebastian Schweighofer-Kodritsch and Roland Strausz)
Abstract; Casting mechanism design with evidence in the framework of Myerson (1982) implies that his generalized revelation principle directly applies, and we thus obtain standard notions of incentive compatible direct mechanisms. Their specific nature depends, however, on whether the presentation of evidence is controllable contractually. For deterministic implementation, we show that, in general, such control has value. We identify two independent conditions under which this value vanishes, one on evidence (WET) and another on preferences (TIWO). Allowing for fully stochastic mechanisms, we also characterize the (limited) extent to which the common assumption of evidentiary normality (NOR) negates any value of randomization. When NOR holds together with WET or TIWO, neither control nor randomization has any value. Many mechanism design settings satisfy these conditions naturally, implying that they are highly tractable.
working paper version (March, 2025)
slides (Toronto, 2022.03.22)
video presentation (90min; newer version)
video presentation (20min; older version)
presentations: Cambridge (UK), University of Toronto, Yale University, Paris School of Economics, Michigan University, Penn State
This work is based on and supersedes my working paper "Mechanism design with partially verifiable information" from 2016.
The Production of Information to Price Discriminate (Willy Lefez)
Abstract: We study price discrimination by a monopolistic seller that endogenously produces a market segmentation at a cost, and question the efficiency of the production of market segmentations led by private incentives. We show that the efficient market segmentation gives all the gains in total surplus to the buyer, and the seller profit stays at the uniform profit level. Our result suggests that the private production of information by sellers to price discriminate is significantly inefficient.
woking paper (July 02, 2025)
Surplus Squeezing and Informational Hold-up (Peter Achim and Willy Lefez)
Abstract: We study a static bilateral trade setting with moral hazard, where a seller privately chooses quality and a buyer may pay to verify it. We show that buyer-side information acquisition can lead to informational hold-up through a mechanism we call surplus squeezing: precise verification enables the seller to extract all buyer surplus, deterring inspection and causing trade to unravel. When verification is noisy, uncertainty preserves buyer surplus and sustains trade. Our framework highlights how strategic responses to learning can distort investment incentives, offering a new perspective on the limits of information precision in mitigating moral hazard.
working paper (July 22, 2025)