Privacy Protection, Security, and Consumer Retention

Résumé

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.

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Codes JEL

Référence

Bruno Jullien, Yassine Lefouili et Michael Riordan, « Privacy Protection, Security, and Consumer Retention », TSE Working Paper, n° 18-947, août 2018, révision juin 2020.