Strategic free information disclosure for search-based information platforms

We investigate information platforms that enable and support user search. Consider users engaged in a sequential search process (e.g. for used cars or consumer goods in e-commerce, or partners on a dating website). Many platforms provide basic information on opportunities of interest for free, while also offering, at a price, premium services that can offer more information to the user on the potential values of different opportunities. Prior research has focused on the question of how to price such services. Here we investigate a novel strategic option: can the platform provide some of the premium services for free, and increase its profit in doing so? By analyzing game theoretic equilibria in such a model, we show that there are cases where the platform can indeed benefit by sometimes providing information for free. The underlying mechanism is that sometimes offering free services leads to more extensive usage of the expert's paid services. A robustness analysis shows that even if the population of users is heterogeneous and a large portion of it a priori does not use the premium services, offering parts of the service for free can still be beneficial for the platform despite the potential misuse.