Working paper

Privacy Protection and Consumer Retention

Bruno Jullien, Yassine Lefouili, and Michael Riordan

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 elusiveness of reliable welfare-improving regulations

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 and Consumer Retention, TSE Working Paper, n. 18-947, August 2018.

See also

Published in

TSE Working Paper, n. 18-947, August 2018