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Privacy Protection, Security, and Consumer Retention

Bruno Jullien (), Yassine Lefouili and Michael Riordan

No 18-947, TSE Working Papers from Toulouse School of Economics (TSE)

Abstract: A website monetizes information it collects about its customers by charging third parties for targeted access to them. Allowing for third parties who are well-intentioned, a nuisance, or even malicious, the resulting consumer experiences might be good, bad, or neutral. As consumers learn from experience, the website especially risks losing those customers who suffer a bad experience. Customer retention thus motivates the website to be cautious about monetization, or to spend resources to screen third parties. We study the website's equilibrium privacy policy, its welfare properties, competition in the market for information, and the impact of regulations improving transparency and consumer control.

Keywords: Privacy Policy; Consumer Retention; Personal Data; Regulation (search for similar items in EconPapers)
JEL-codes: D83 L15 L51 (search for similar items in EconPapers)
Date: 2018-08, Revised 2020-04
New Economics Papers: this item is included in nep-law and nep-mic
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