Data Privacy and Temptation

Zhuang Liu, Michael Sockin and Wei Xiong
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Zhuang Liu: University of California, Berkeley
Michael Sockin: University of Texas at Austin
Wei Xiong: Princeton University

Working Papers from Princeton University. Economics Department.

Abstract: This paper microfounds a consumer's preference for data privacy as a mechanism for concealing behavioral vulnerabilities. This approach facilitates a welfare analysis of different data privacy regulations, such as the GDPR and CCPA. Sharing data with a digital platform benefits a consumer through improved matching efficiency with normal consumption goods at the expense of exposing those with self-control issues to temptation goods. Although the GDPR and CCPA empower consumers to opt in or out of data sharing, our analysis also highlights the limitations of these regulations because of nuanced data sharing externalities induced by consumers' active and default choices.

Keywords: data; privacy; data privacy regulations; GDPR; CCPA (search for similar items in EconPapers)
JEL-codes: C80 K33 O38 (search for similar items in EconPapers)
Date: 2021-12
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http://wxiong.mycpanel.princeton.edu/papers/Privacy.pdf

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Persistent link: https://EconPapers.repec.org/RePEc:pri:econom:2021-77

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