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Online Privacy and Information Disclosure by Consumers

Shota Ichihashi ()

Staff Working Papers from Bank of Canada

Abstract: I study the welfare and price implications of consumer privacy. A consumer discloses information to a multi-product seller, which learns about the consumer’s preferences, sets prices, and makes product recommendations. While the consumer benefits from accurate product recommendations, the seller may use the information to price discriminate. I show that the seller prefers to commit to not using consumer information for pricing to encourage information disclosure. However, this commitment hurts the consumer, who could be better off by pre-committing to withhold some information. In contrast to single-product models, total surplus may be lower if the seller can base prices on information.

Keywords: Economic; models (search for similar items in EconPapers)
JEL-codes: D82 D83 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2019-06
New Economics Papers: this item is included in nep-com and nep-pay
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Citations: View citations in EconPapers (36) Track citations by RSS feed

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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocawp:19-22

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