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;
JEL codes
- D83: Search • Learning • Information and Knowledge • Communication • Belief
- L15: Information and Product Quality • Standardization and Compatibility
- L51: Economics of Regulation
Reference
Bruno Jullien, Yassine Lefouili, and Michael Riordan, “Privacy Protection, Security, and Consumer Retention”, TSE Working Paper, n. 18-947, August 2018, revised June 2020.
See also
Published in
TSE Working Paper, n. 18-947, August 2018, revised June 2020