Regulating Privacy Policies on Digital Platforms

Michele Bisceglia, Alessandro Bonatti and Fiona Scott Morton

No 20842, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We study how privacy regulation affects menu pricing by a monopolist platform that collects and monetizes personal data. Consumers differ in privacy valuation and sophistication: naïve users ignore privacy losses, while sophisticated users internalize them. The platform designs prices and data collection options to screen users. Without regulation, privacy allocations are distorted and naïve users are exploited. Regulation through privacy-protecting defaults can create a market for information by inducing payments for data; hard caps on data collection protect naïve users but may restrict efficient data trade.

Keywords: Data; Defaults; Privacy (search for similar items in EconPapers)
JEL-codes: D18 D82 D83 L12 L51 (search for similar items in EconPapers)
Date: 2025-11
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