Polarization, Regulation and Networks in a Data Market

The thesis focuses on the economy of data; data which is generated by user activity on social networking platforms like Facebook. We know that platforms like Facebook use data or information about users to provide services like better product recommendations and also for improving their estimate of a user’s willingness to pay for a product. Additionally, scandals like Cambridge Analytica have increased concerns about how user data is analyzed by platforms. Thus, data collection and analysis done by a platform can be both beneficial and harmful for a user, which brings us to the question - • What is the optimal privacy policy for users on an online platform? Should users be given more (less) control over their data? How does the optimal privacy policy depend on the purpose for which a platform collects user data? Another concern is the increasing polarization among users on online platforms. A polarized society can have serious political implications, as we have seen in elections across countries like USA and India. It can also change and perhaps even damage the social fabric of our society. It is therefore important to understand why are online platforms (seemingly) so divisive. This brings us to the second major question of this research - • Does an online platform have an incentive to increase polarization of its social network? One can consider another way in which a society may be polarized, namely, when different kinds of users are on different platforms. This results in no interaction between different kinds of users and can increase polarization between users. For e.g., consider Facebook and Instagram. Facebook is popular among middle aged people and Instagram is popular among the younger generation. This causes an age based segregation between two groups of people. Again, such segregation maybe harmful for society and brings us to the question - • Does an online platform have an incentive to segregate different types of users onto different platforms? I address these three topics in the three chapters of my thesis below.