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Dynamic Privacy Choices

  • Shota Ichihashi
American Economic Journal: Microeconomics
vol. 15, no. 2, May 2023
(pp. 1-40)
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Abstract

I study a dynamic model of consumer privacy and platform data collection. In each period consumers choose their level of platform activity. Greater activity generates more information about the consumer, thereby increasing platform profits. When the platform can commit to the future privacy policy, it collects information by committing to gradually decreasing the level of privacy protection. In the long run consumers lose privacy and receive low payoffs but choose high activity levels. In contrast, the platform with weaker commitment power may attain the commitment outcome or fail to collect any data depending on consumer expectations regarding future privacy protection.

Citation

Ichihashi, Shota. 2023. "Dynamic Privacy Choices." American Economic Journal: Microeconomics, 15 (2): 1-40. DOI: 10.1257/mic.20210100

Additional Materials

JEL Classification

  • C93 Field Experiments
  • D11 Consumer Economics: Theory
  • D82 Asymmetric and Private Information; Mechanism Design
  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
  • D84 Expectations; Speculations
  • L86 Information and Internet Services; Computer Software
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