Privacy and Persuasion: are we getting the best deal?

Elias Carroni, Luca Ferrari and Simone Righi
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Luca Ferrari: Dipartimento di Scienze per l'Economia e l'Impresa

Working Papers - Economics from Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa

Abstract: We shed new lights on the desirability of privacy invasion by web–masters in online markets. We consider website’s users uncertain about their need for a prod- uct and advertisers being offered banner spaces to show their commercials. The latter are designed as bayesian experiments. We show the emergence of different types of advertisement, ranging from fully informative to cheap talk. However, fully–informative banners are never showed if users can privately and costly acquire information about their state of necessity. As a result, when users’ privacy is vio- lated, they buy products they do not need and that they would not have bought if privacy were protected.

Keywords: Privacy; Bayesian Persuasion; Advertisement; Targeting. (search for similar items in EconPapers)
JEL-codes: D21 D80 L10 L51 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2017
New Economics Papers: this item is included in nep-exp and nep-ict
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