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Carpe Data: Protecting online privacy with naive users

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  • Abrardi, Laura
  • Cambini, Carlo

Abstract

In this paper, we study the optimal design of incentives to induce a digital platform to limit the extraction of data from users, whose privacy loss is further aggravated by their naive use of the platform. We show that caps on the amount of data collected can induce the optimal data-saving effort by the platform. If the platform’s effort is not observable, a menu of data caps should be provided and it entails a higher (lower) loss of privacy for less (more) naive users, relative to the first best. We also show that compensating users for their data can efficiently incentivize effort, but might increase the privacy loss of more naive users.

Suggested Citation

  • Abrardi, Laura & Cambini, Carlo, 2022. "Carpe Data: Protecting online privacy with naive users," Information Economics and Policy, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:iepoli:v:60:y:2022:i:c:s0167624522000270
    DOI: 10.1016/j.infoecopol.2022.100988
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    Cited by:

    1. Lefouili, Yassine & Toh, Ying Lei & Madio, Leonardo, 2017. "Privacy Regulation and Quality-Enhancing Innovation," TSE Working Papers 17-795, Toulouse School of Economics (TSE), revised Jul 2023.

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    More about this item

    Keywords

    Data extraction; Incentives; Users’ naivety; Privacy;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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