The Microeconomics Seminar: Every Wednesday at 12:15 pm.

Time: 12:15 pm – 1:30 pm
Date: 30th of May 2018
Place: Room 3001.

Simon ANDERSON (University of Virginia) – “Demand for privacy, selling consumer information, and consumer hiding vs. opt-out” joint with N. Larson, M. Sanchez, and A. Urbano

Abstract: We consider consumers choosing whether to buy a good when they know that information about them can be sold to another firm selling a good they might buy. This causes some consumers to hide their types by not buying the first good, which delivers an endogenous demand for privacy and renders the demand for the second good more inelastic. But it also can give the firm in the first market a greater incentive to harvest consumers to sell to the second, so the upstream price can go down while increasing the downstream price. We determine whether information selling improves upstream profits, consumer surplus, and total welfare, and we find the consequences of allowing consumers to opt out of having their information sold by the upstream firm. We consider the value of information for a downstream duopoly and extend to oligopoly, highlighting the externalities on consumers and other firms when one has information it uses to price discriminate. We show how exogenous hiding costs cannot generate hiding in equilibrium, but rendering these costs endogenous through the upstream (information gathering) market restores hiding behavior in equilibrium.

Organizers:
Marie-Laure Allain, Pierre Boyer, Laurent Linnemer  &  Morgane Cure (CREST)

Sponsors:
CREST

Food is provided.

The Microeconomics Seminar: Every Wednesday at 12:15 pm.

Time: 12:15 pm – 1:30 pm
Date: 30th of May 2018
Place: Room 3001.

Simon ANDERSON (University of Virginia) – “Demand for privacy, selling consumer information, and consumer hiding vs. opt-out” joint with N. Larson, M. Sanchez, and A. Urbano

Abstract: We consider consumers choosing whether to buy a good when they know that information about them can be sold to another firm selling a good they might buy. This causes some consumers to hide their types by not buying the first good, which delivers an endogenous demand for privacy and renders the demand for the second good more inelastic. But it also can give the firm in the first market a greater incentive to harvest consumers to sell to the second, so the upstream price can go down while increasing the downstream price. We determine whether information selling improves upstream profits, consumer surplus, and total welfare, and we find the consequences of allowing consumers to opt out of having their information sold by the upstream firm. We consider the value of information for a downstream duopoly and extend to oligopoly, highlighting the externalities on consumers and other firms when one has information it uses to price discriminate. We show how exogenous hiding costs cannot generate hiding in equilibrium, but rendering these costs endogenous through the upstream (information gathering) market restores hiding behavior in equilibrium.

Organizers:
Marie-Laure Allain, Pierre Boyer, Laurent Linnemer  &  Morgane Cure (CREST)

Sponsors:
CREST

Food is provided.