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The Right to Be Informed and the Right to Be Forgotten. Welfare Implications in Presence of Myopic Consumers

In: The Law and Economics of Privacy, Personal Data, Artificial Intelligence, and Incomplete Monitoring

Author

Listed:
  • Carlo Capuano
  • Iacopo Grassi
  • Giacomo Valletta

Abstract

We propose a simple model consisting of two separated markets: the market for goodyand the market for goodx. Purchasing information about consumer behavior in the former market helps the monopolist firm, in the latter market, to price-discriminate. Consumers differ in their income and in their level of myopia. Personal data market regulation could both increase consumers' awareness about the treatment of their data and allow them to have their data erased from the data holder. We find that the former aspect of the policy reduces the number of transactions, and hence tends to reduce total surplus, while the second typically boosts willingness to pay of consumers and has positive effects on surplus, provided that the share of high-income consumers is not too high. The overall effect of regulation on total welfare depends on the share of high-income and myopic consumers.

Suggested Citation

  • Carlo Capuano & Iacopo Grassi & Giacomo Valletta, 2022. "The Right to Be Informed and the Right to Be Forgotten. Welfare Implications in Presence of Myopic Consumers," Research in Law and Economics, in: The Law and Economics of Privacy, Personal Data, Artificial Intelligence, and Incomplete Monitoring, volume 30, pages 3-28, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rlwezz:s0193-589520220000030003
    DOI: 10.1108/S0193-589520220000030003
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    More about this item

    Keywords

    C73; D82; D83; Privacy; regulation; data; myopic consumers; sophisticated consumers; price discrimination; surplus;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • 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

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