The Value of Anonymous Option

Jianpei Li and Wanzhu Zhang

MPRA Paper from University Library of Munich, Germany

Abstract: Privacy regulations require that sellers obtain explicit consumer consent before collecting personal data. We formalize this requirement by introducing an anonymous option, which allows consumers to maintain anonymity during transactions. In a repeated-purchase model under limited commitment, we examine a monopolist's incentives to offer this option and its welfare implications. Despite full surplus extraction through data collection, the seller generally benefits from the option, as it credibly supports a high second-period uniform price and mitigates the ratchet effect. However, the option may reduce consumer surplus and social welfare due to higher average prices and lower aggregate demand.

Keywords: anonymous option; data disclosure; personalized pricing; privacy concern (search for similar items in EconPapers)
JEL-codes: D4 D8 L1 (search for similar items in EconPapers)
Date: 2025-03-18
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