Information Design in Screening Markets

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How much consumer data should firms be allowed to use when tailoring products and prices? We study this question in markets where a seller designs product menus and a regulator decides how much information can be revealed. The optimal policy depends on group similarity and the extent of distortions: sometimes full privacy is best, sometimes disclosure makes no difference, and in between cases partial revelation can improve welfare. We extend the framework to continuous populations and highlight applications to digital platforms, financial products, and insurance.