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Privacy Protection, Security, and Consumer Retention

Author

Listed:
  • Bruno Jullien

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Yassine Lefouili

    (TSE-R - Toulouse School of Economics - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Michael Riordan

    (Columbia University [New York])

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 su¤er 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 impact of regulations improving transparency and consumer control.

Suggested Citation

  • Bruno Jullien & Yassine Lefouili & Michael Riordan, 2020. "Privacy Protection, Security, and Consumer Retention," Working Papers hal-03095660, HAL.
    • Handle: RePEc:hal:wpaper:hal-03095660
    DOI: 10.2139/ssrn.3655040
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    References listed on IDEAS

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    Cited by:

    1. Dirk Bergemann & Marco Ottaviani, 2021. "Information Markets and Nonmarkets," Cowles Foundation Discussion Papers 2296, Cowles Foundation for Research in Economics, Yale University.
    2. Flavio Pino, 2022. "The microeconomics of data – a survey," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(3), pages 635-665, September.
    3. Dirk Bergemann & Alessandro Bonatti & Tan Gan, 2022. "The economics of social data," RAND Journal of Economics, RAND Corporation, vol. 53(2), pages 263-296, June.
    4. Sarit Markovich & Yaron Yehezkel, 2021. "“For the public benefit”: who should control our data?," Working Papers 21-08, NET Institute.
    5. Alessandro Bonatti, 2023. "The Platform Dimension of Digital Privacy," NBER Chapters, in: The Economics of Privacy, National Bureau of Economic Research, Inc.
    6. Abrardi, Laura & Cambini, Carlo, 2022. "Carpe Data: Protecting online privacy with naive users," Information Economics and Policy, Elsevier, vol. 60(C).
    7. Itay P. Fainmesser & Andrea Galeotti & Ruslan Momot, 2023. "Digital Privacy," Management Science, INFORMS, vol. 69(6), pages 3157-3173, June.
    8. Wing Man Wynne Lam & Jacob Seifert, 2023. "Regulating Data Privacy and Cybersecurity," Journal of Industrial Economics, Wiley Blackwell, vol. 71(1), pages 143-175, March.
    9. Loertscher, Simon & Marx, Leslie M., 2020. "Digital monopolies: Privacy protection or price regulation?," International Journal of Industrial Organization, Elsevier, vol. 71(C).
    10. Bonatti, Alessandro & Argenziano, Rossella, 2020. "Information Revelation and Privacy Protection," CEPR Discussion Papers 15203, C.E.P.R. Discussion Papers.
    11. Annie Liang & Erik Madsen, 2020. "Data and Incentives," Papers 2006.06543, arXiv.org, revised Sep 2022.

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    More about this item

    Keywords

    Privacy Policy; Consumer Retention; Personal Data; Regulation;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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