Voluntary Disclosure and Personalized Pricing

S. Nageeb Ali (), Gregory Lewis and Shoshana Vasserman

No 26592, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Firms have ever increasing access to consumer data, which they use to personalize their advertising and to price discriminate. This raises privacy concerns. Policymakers have argued in response that consumers should be given control over their data, able to choose what to share and when. Since firms learn about a consumer’s preferences both from what they do and do not disclose, the equilibrium implications of consumer control are unclear. We study whether such measures improve consumer welfare in monopolistic and in competitive markets. We find that consumer control can improve consumer welfare relative to both perfect price discrimination and uniform pricing. First, consumers can use disclosure to amplify competitive forces. Second, consumers can disclose information to induce even a monopolist to lower prices. Whether consumer control improves welfare depends on the disclosure technology and market competitiveness. Simple disclosure technologies suffice in competitive markets. When facing a monopolist, a consumer needs partial disclosure possibilities to obtain any welfare gains.

JEL-codes: D4 D8 (search for similar items in EconPapers)
Date: 2019-12
New Economics Papers: this item is included in nep-com and nep-reg
Note: IO
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Citations: View citations in EconPapers (22)

Published as S Nageeb Ali & Greg Lewis & Shoshana Vasserman, 2023. "Voluntary Disclosure and Personalized Pricing," The Review of Economic Studies, vol 90(2), pages 538-571.

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Journal Article: Voluntary Disclosure and Personalized Pricing (2023)
Working Paper: Voluntary Disclosure and Personalized Pricing (2022)
Working Paper: Voluntary Disclosure and Personalized Pricing (2020)
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