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Consumer Privacy and Marketing Avoidance: A Static Model

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Author Info

  • Il-Horn Hann

    ()
    (Marshall School of Business, University of Southern California, Los Angeles, California 90089)

  • Kai-Lung Hui

    ()
    (Department of Information Systems, City University of Hong Kong, Hong Kong and Department of Information Systems, National University of Singapore, Singapore 117543)

  • Sang-Yong T. Lee

    ()
    (College of Information and Communications, Hanyang University, Seoul 133-791, Korea)

  • Ivan P. L. Png

    ()
    (Department of Information Systems and School of Business, National University of Singapore, Singapore 117543)

Abstract

We introduce the concept of marketing avoidance--consumer efforts to conceal themselves and to deflect marketing. The setting is one in which sellers market some item through solicitations to potential consumers, who differ in their benefit from the item and suffer harm from receiving solicitations. Concealment by one consumer induces sellers to shift solicitations to other consumers, whereas deflection does not. Solicitations cause two externalities: direct harm on consumers and the (indirect) cost of consumer concealment and deflection. We find that in markets where the marginal cost of solicitation is sufficiently low, efforts by low-benefit consumers to conceal themselves will increase the cost-effectiveness of solicitations and lead sellers to market more. However, concealment by high-benefit consumers leads sellers to market less. Furthermore, concealment by low-benefit consumers increases direct privacy harm, and consumer welfare is higher with deflection than concealment. Finally, it is optimal to impose a charge on solicitations.

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File URL: http://dx.doi.org/10.1287/mnsc.1070.0837
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Bibliographic Info

Article provided by INFORMS in its journal Management Science.

Volume (Year): 54 (2008)
Issue (Month): 6 (June)
Pages: 1094-1103

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Handle: RePEc:inm:ormnsc:v:54:y:2008:i:6:p:1094-1103

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Related research

Keywords: marketing avoidance; privacy; advertising; promotion; segmentation;

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Cited by:
  1. Luc Wathieu & Allan Friedman, 2009. "An empirical approach to understanding privacy concerns," ESMT Research Working Papers ESMT-09-001, ESMT European School of Management and Technology, revised 14 Jan 2009.
  2. Khim Yong, Goh & Kai-Lung, Hui & I.P.L., Png, 2008. "Social Interaction, Observational Learning, and Privacy: the "Do Not Call" Registry," MPRA Paper 8225, University Library of Munich, Germany.
  3. Spiegel, Yossi, 2013. "Commercial software, adware, and consumer privacy," International Journal of Industrial Organization, Elsevier, vol. 31(6), pages 702-713.
  4. Armstrong, Mark & Vickers, John & Zhou, Jidong, 2008. "Consumer protection and the incentive to become informed," MPRA Paper 9898, University Library of Munich, Germany.
  5. Konrad, Kai A., 2010. "Merger profitability in industries with brand portfolios and loyal customers," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2010-08, Social Science Research Center Berlin (WZB).
  6. Chiao, Benjamin & MacKie-Mason, Jeffrey, 2012. "Using uncensored communication channels to divert spam traffic," Information Economics and Policy, Elsevier, vol. 24(3), pages 173-186.
  7. Qiang Fu & Jingfeng Lu, 2012. "Micro foundations of multi-prize lottery contests: a perspective of noisy performance ranking," Social Choice and Welfare, Springer, vol. 38(3), pages 497-517, March.

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