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The economics of advertising and privacy

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  • Tucker, Catherine E.

Abstract

One of the new realities of advertising is that personal information can be used to ensure that advertising is only shown and designed for a select group of consumers who stand to gain most from this information. However, to gather the data used for targeting requires some degree of privacy intrusion by advertisers. This sets up a tradeoff between the informativeness of advertising and the degree of privacy intrusion. This paper summarizes recent empirical research that illuminates this tradeoff.

Suggested Citation

  • Tucker, Catherine E., 2012. "The economics of advertising and privacy," International Journal of Industrial Organization, Elsevier, vol. 30(3), pages 326-329.
  • Handle: RePEc:eee:indorg:v:30:y:2012:i:3:p:326-329 DOI: 10.1016/j.ijindorg.2011.11.004
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    References listed on IDEAS

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    1. Clee, Mona A & Wicklund, Robert A, 1980. " Consumer Behavior and Psychological Reactance," Journal of Consumer Research, Oxford University Press, vol. 6(4), pages 389-405, March.
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    11. Avi Goldfarb & Catherine Tucker, 2011. "Search Engine Advertising: Channel Substitution When Pricing Ads to Context," Management Science, INFORMS, vol. 57(3), pages 458-470, March.
    12. Tiffany White & Debra Zahay & Helge Thorbjørnsen & Sharon Shavitt, 2008. "Getting too personal: Reactance to highly personalized email solicitations," Marketing Letters, Springer, vol. 19(1), pages 39-50, March.
    13. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Oxford University Press, vol. 44(3), pages 465-491.
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    Citations

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    Cited by:

    1. Potoglou, Dimitris & Palacios, Juan & Feijoo, Claudio & Gómez Barroso, Jose-Luis, 2015. "The supply of personal information: A study on the determinants of information provision in e-commerce scenarios," 26th European Regional ITS Conference, Madrid 2015 127174, International Telecommunications Society (ITS).
    2. Kummer, Michael & Schulte, Patrick, 2014. "Money and privacy: Android market evidence," ZEW Discussion Papers 14-131, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    3. Cecere, Grazia & Le Guel, Fabrice & Soulié, Nicolas, 2012. "Perceived Internet privacy concerns on social network in Europe," MPRA Paper 41437, University Library of Munich, Germany.
    4. Miettinen, Topi & Stenbacka, Rune, 2015. "Personalized pricing versus history-based pricing: implications for privacy policy," Information Economics and Policy, Elsevier, vol. 33(C), pages 56-68.
    5. repec:eee:jbrese:v:82:y:2018:i:c:p:103-116 is not listed on IDEAS
    6. Thierry Warin & Nathalie de Marcellis-Warin & Antoine Troadec & William Sanger & Bertrand Nembot, 2014. "Un état des lieux sur les données massives," CIRANO Burgundy Reports 2014rb-01, CIRANO.
    7. Avi Goldfarb, 2014. "What is Different About Online Advertising?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 115-129, March.
    8. Anna D'Annunzio & Antonio Russo, 2017. "Ad Networks, Consumer Tracking, and Privacy," CESifo Working Paper Series 6667, CESifo Group Munich.
    9. Randall Lewis & Justin M. Rao & David H. Reiley, 2015. "Measuring the Effects of Advertising: The Digital Frontier," NBER Chapters,in: Economic Analysis of the Digital Economy, pages 191-218 National Bureau of Economic Research, Inc.
    10. Cecere, Grazia & Rochelandet, Fabrice, 2013. "Privacy intrusiveness and web audiences: Empirical evidence," Telecommunications Policy, Elsevier, vol. 37(10), pages 1004-1014.
    11. Potoglou, Dimitris & Palacios, Juan-Francisco & Feijóo, Claudio, 2015. "An integrated latent variable and choice model to explore the role of privacy concern on stated behavioural intentions in e-commerce," Journal of choice modelling, Elsevier, vol. 17(C), pages 10-27.
    12. Taylor, Curtis & Wagman, Liad, 2014. "Consumer privacy in oligopolistic markets: Winners, losers, and welfare," International Journal of Industrial Organization, Elsevier, vol. 34(C), pages 80-84.
    13. Blades, Nicholas & Herrera-González, Fernando, 2016. "An Economic Analysis of Personal Data Protection Obligations in the European Union," 27th European Regional ITS Conference, Cambridge (UK) 2016 148661, International Telecommunications Society (ITS).
    14. Klaus M. Miller & Bernd Skiera, 2017. "Economic Damage of Cookie Lifetime Restrictions," Working Papers 17-02, NET Institute.

    More about this item

    Keywords

    Privacy; Online advertising; Targeting;

    JEL classification:

    • M3 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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