Consumers' privacy choices in the era of big data

Dengler, Sebastian and Prüfer, Jens ORCID: (2021) Consumers' privacy choices in the era of big data. Games and Economic Behavior, 130. pp. 499-520. ISSN 0899-8256

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Recent progress in information technologies provides sellers with detailed knowledge about consumers' preferences, approaching perfect price discrimination in the limit. We construct a model where consumers with less strategic sophistication than the seller's pricing algorithm face a trade-off when buying. They choose between a direct, transaction cost-free sales channel and a privacy-protecting, but costly, anonymous channel. We show that the anonymous channel is used even in the absence of an explicit taste for privacy if consumers are not too strategically sophisticated. This provides a micro-foundation for consumers' privacy choices. Some consumers benefit but others suffer from their anonymization.

Item Type: Article
Uncontrolled Keywords: big data,level-k thinking,perfect price discrimination,privacy,finance,economics and econometrics ,/dk/atira/pure/subjectarea/asjc/2000/2003
Faculty \ School: Faculty of Social Sciences > School of Economics
UEA Research Groups: Faculty of Social Sciences > Research Centres > Centre for Competition Policy
Faculty of Social Sciences > Research Groups > Economic Theory
Faculty of Social Sciences > Research Groups > Industrial Economics
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Depositing User: LivePure Connector
Date Deposited: 12 Sep 2022 10:31
Last Modified: 21 Oct 2023 00:42
DOI: 10.1016/j.geb.2021.09.007

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