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
"Informative Certification: Screening vs. Acquisition" (Celik and Strausz), Review of Economic Studies accepted for publication
Abstract: This paper studies monopolistic certification in markets where sellers possess partial private information about product quality. A certifier can provide information through two channels: screening sellers' private information (soft information) and acquiring new quality data (hard information). We prove that any certification menu achieving less than maximal screening is Pareto dominated by one with full screening. Among Pareto-efficient menus, the certifier's profit-maximising menu provides maximal soft information while restricting hard information provision. The two channels diverge because screening creates value the certifier can fully capture, whereas hard information amplifies costly information rents. Using power value functions, we derive comparative statics showing that information restrictions target low-quality sellers when information value is moderate, but high-quality sellers receive perfect quality revelation when information value is high.
video presentation (March, 2025)
slides (updated to October, 2025)
working paper (July, 2026)
"Consumer Consent Regulation" German Economic Review, 2025, (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" (Krähmer and 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" (Krähmer and Strausz) 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)
Principled Mechanism Design with Evidence (Schweighofer-Kodritsch and 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 (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 (Achim and 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)
Mediated Renegotiation (Attar, Bozzoli, Strausz)
Abstract; We propose a novel approach to contract renegotiation with asymmetric information, introducing mediated mechanisms that generate additional private information to deter renegotiation. These mechanisms prevent any renegotiation, upholding secondbest optimality as the unique equilibrium outcome. Thus, the inefficiencies typically associated with the threat of renegotiation are completely offset by the design of mediated mechanisms. We formally illustrate this result in the canonical framework of Fudenberg and Tirole (1990). We explicitly show that these mediated mechanisms can be decentralized by smart contracts, running on a public blockchain, which guarantees that our results do not require any trustworthy third party.
slides (Paris, 2025)
video presentation (June, 2024)
Oligopolistic Information Markets (Achim, Strausz)
Abstract: We study competition and entry in information markets where buyers combine sellers' signals. Price competition yields efficient trade but need not leave the buyer any surplus. Entry may be anti-competitive, reducing buyer surplus, but is never socially excessive. Competition works through the coalitions of sellers the buyer can credibly exclude. We introduce two notions of complementarity that characterize buyer surplus extraction. Weak competitive complementarity is equivalent to full extraction in some equilibrium. Strong competitive complementarity is equivalent to full extraction in every equilibrium. A global test fully characterizes the weak notion; adding a local test characterizes the strong notion.
working paper (July 2026)
presentation for EC'2026
"Monetizing Digital Content with Network Effects" (Meisner, Pillath)
Abstract: We design profit-maximizing mechanisms to sell an excludable and non-rival good with positive and/or negative network effects. Buyers have heterogeneous private values that depend on how many others also consume the good. In optimum, an endogenous number of the highest types consume the good, and we can implement this allocation in dominant strategies. We apply our insights to digital content creation, and we are able to rationalize features seen in monetization schemes in this industry such as voluntary contributions, community subsidies, and exclusivity bids.
working paper (August 2024)
"How to get advice from reputation concerned experts" (Habibi, Gamp, Meisner)
coming soon
"When to Hire an Influencer?" (Meng, Zhang)
Abstract: We study a model of strategic communication in which a reviewer sends a signal to buyers, whose subsequent actions determine the payoffs of three parties: the buyers, the reviewer, and the seller. Buyers can be either experienced or inexperienced. We characterise the seller’s optimal equilibrium under the conditions that trade occurs with positive probability. Notably, the seller has an incentive to hire a reviewer even when there is no welfare effect. We show that the reviewer may truthfully reveal the match value even when only an incentive constraint is imposed. Compared to the baseline without a reviewer, the seller hires a reviewer only if her effort cost is sufficiently low; this threshold depends on the fraction of inexperienced consumers. Finally, by reinterpreting the model through a Bayesian persuasion framework, we establish an equivalence between strategic communication and optimal information disclosure in persuasion.
working paper (October 2025)