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Dynamic Privacy Choices†

Dynamic Privacy Choices† AbstractI 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. (JEL C93, D11, D82, D83, D84, L86) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal Microeconomics American Economic Association

Dynamic Privacy Choices†

40 pages

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Publisher
American Economic Association
Copyright
Copyright © 2023 © American Economic Association
ISSN
1945-7685
DOI
10.1257/mic.20210100
Publisher site
See Article on Publisher Site

Abstract

AbstractI 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. (JEL C93, D11, D82, D83, D84, L86)

Journal

American Economic Journal MicroeconomicsAmerican Economic Association

Published: May 1, 2023

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