Strategic Data Sharing between Competitors

• URL: http://arxiv.org/abs/2305.16052v3
• Date: Mon, 30 Oct 2023 09:16:02 GMT
• Title: Strategic Data Sharing between Competitors
• Authors: Nikita Tsoy and Nikola Konstantinov
• Abstract summary: We introduce a general framework for analyzing this data-sharing trade-off. We study an instantiation of the framework, based on a conventional market model from economic theory. Our findings indicate a profound impact of market conditions on the data-sharing incentives.
• Score: 4.8951183832371
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: Collaborative learning techniques have significantly advanced in recent years, enabling private model training across multiple organizations. Despite this opportunity, firms face a dilemma when considering data sharing with competitors -- while collaboration can improve a company's machine learning model, it may also benefit competitors and hence reduce profits. In this work, we introduce a general framework for analyzing this data-sharing trade-off. The framework consists of three components, representing the firms' production decisions, the effect of additional data on model quality, and the data-sharing negotiation process, respectively. We then study an instantiation of the framework, based on a conventional market model from economic theory, to identify key factors that affect collaboration incentives. Our findings indicate a profound impact of market conditions on the data-sharing incentives. In particular, we find that reduced competition, in terms of the similarities between the firms' products, and harder learning tasks foster collaboration.

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