Consumer Control and Privacy Policies
AbstractFirms use consumer data to price discriminate. In response, policymakers have pushed for consumers to have control over their data so that they choose what to share and with whom. We model consumer control and its effect on markets through the lens of voluntary disclosure: the consumer has characteristics that they can verifiably disclose to the market. The market in turn draws inferences in equilibrium. Using this framework, we identify when consumers benefit from price discrimination in monopolistic and competitive markets. We also show that this framework can resolve the privacy paradox and potentially offers new limits for price discrimination.
CitationAli, S. Nageeb, Greg Lewis, and Shoshana Vasserman. 2023. "Consumer Control and Privacy Policies." AEA Papers and Proceedings, 113: 204-09. DOI: 10.1257/pandp.20231085
- C81 Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
- D18 Consumer Protection
- D42 Market Structure, Pricing, and Design: Monopoly
- D43 Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness