Privacy and the Value of Data
AEA Papers and Proceedings
vol. 113,
May 2023
(pp. 197-203)
Abstract
How does protecting consumers' privacy affect the value of their personal data? We model an intermediary that uses consumers' data to influence prices set by a seller. When privacy is protected, consumers choose whether to disclose their data to the intermediary. When privacy is not protected, the intermediary can access consumers' data without their consent. We illustrate that protecting privacy has complex effects. It can increase the value of some consumers' data while decreasing that of others. It can have redistributive effects, by benefiting some consumers at the expense of others. Finally, it can increase average prices and reduce trade.Citation
Galperti, Simone, and Jacopo Perego. 2023. "Privacy and the Value of Data." AEA Papers and Proceedings, 113: 197-203. DOI: 10.1257/pandp.20231084Additional Materials
JEL Classification
- D11 Consumer Economics: Theory
- D18 Consumer Protection
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- K24 Cyber Law