Paying with Personal Data

Gisle Natvik and Thomas Tangerås ()
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Thomas Tangerås: Research Institute of Industrial Economics (IFN), Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden, https://www.ifn.se/en/researchers/ifn-researcher/thomas-tangeras/

No 1481, Working Paper Series from Research Institute of Industrial Economics

Abstract: We study commercialization of personal data through personalized advertising by a content platform. Content consumption generates productive data about consumer preferences. The firm invests in artificial intelligence (AI) to improve analytical power and in quality to stimulate content consumption. The profit-maximizing tariff is zero if productive data are highly valuable. Subsidization of usage would generate nonproductive data and be unprofitable. Data provision is efficient when users pay entirely with personal data because then content consumption optimally trades off improvements in user experience against losses in privacy rent. Still, privacy protection is inefficient because of distorted incentives to invest in AI.

Keywords: Artificial intelligence; Content platform; Personalized advertising; Privacy; Quality (search for similar items in EconPapers)
JEL-codes: D82 L12 L15 L81 M37 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2023-12-07
New Economics Papers: this item is included in nep-ain, nep-mic and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1481

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