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Jan Büchel / Christian Rusche IW-Report No. 33 16. June 2023 Theoretical effects of uncertainty in the evaluation of data

Businesses can benefit from effective data management and data sharing with other businesses. Data recipients can use the data for product or process optimization, for example, and data providers can receive a fee.

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Theoretical effects of uncertainty in the evaluation of data
Jan Büchel / Christian Rusche IW-Report No. 33 16. June 2023

Theoretical effects of uncertainty in the evaluation of data

Study within the project IEDS, funded and supervised by the Federal Ministry of Education and Research (BMBF)

German Economic Institute (IW) German Economic Institute (IW)

Businesses can benefit from effective data management and data sharing with other businesses. Data recipients can use the data for product or process optimization, for example, and data providers can receive a fee.

However, the evaluation of the data is mostly heterogeneous among the companies, since different evaluation methods are used, for example. In some cases, data is not evaluated at all or companies are not (yet) able to manage data efficiently. These possibilities can lead to uncertainties about the value of a data set. The effects this has on the number of transactions is examined using a game-theoretical model. In particular, it can be proven that uncertainty about the data evaluation of the transaction partner prevents economically sensible data sharing in certain constellations. The reason is that a price-proposing data seller demands a price that is too high for some constellations due to the uncertainty. Whereas price-proposing data buyers set a price that is too low. From an individual point of view, buyers and sellers benefit from this because they can increase their expected payout. However, the probability of a transaction decreases, making it more difficult to exploit the full potential of data from an economics perspective.

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Theoretical effects of uncertainty in the evaluation of data
Jan Büchel / Christian Rusche IW-Report No. 33 16. June 2023

Theoretical effects of uncertainty in the evaluation of data

Study within the project IEDS, funded and supervised by the Federal Ministry of Education and Research (BMBF)

German Economic Institute (IW) German Economic Institute (IW)

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The Potential and the Reality in German Companies
Dennis Bakalis / Jan Büchel IW-Trends No. 2 14. June 2024

Data Utilisation and Data Sharing: The Potential and the Reality in German Companies

Companies that store their data extensively in digital form, process it in a structured manner and use it in a variety of ways can become particularly efficient members of the data economy.

IW

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Thomas Eger / Marc Scheufen in European Journal of Law and Economics External Publication 27. May 2024

The Law and Economics of the Data Economy: Introduction to the Special Issue

This article intends to provide a framework to better understand the economic problems and legal challenges resulting from the transition of the European economy to a data economy.

IW

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