Voluntary Disclosure and Personalized Pricing / S. Nageeb Ali, Gregory Lewis, Shoshana Vasserman.

Format:

Book

Author/Creator:

Ali, S. Nageeb.

Contributor:

National Bureau of Economic Research.

Lewis, Gregory.

Vasserman, Shoshana.

Series:

Working Paper Series (National Bureau of Economic Research) no. w26592.

NBER working paper series no. w26592

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

Firms have ever increasing access to consumer data, which they use to personalize their advertising and to price discriminate. This raises privacy concerns. Policymakers have argued in response that consumers should be given control over their data, able to choose what to share and when. Since firms learn about a consumer's preferences both from what they do and do not disclose, the equilibrium implications of consumer control are unclear. We study whether such measures improve consumer welfare in monopolistic and in competitive markets. We find that consumer control can improve consumer welfare relative to both perfect price discrimination and uniform pricing. First, consumers can use disclosure to amplify competitive forces. Second, consumers can disclose information to induce even a monopolist to lower prices. Whether consumer control improves welfare depends on the disclosure technology and market competitiveness. Simple disclosure technologies suffice in competitive markets. When facing a monopolist, a consumer needs partial disclosure possibilities to obtain any welfare gains.

Notes:

Print version record

December 2019.