IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/34025.html
   My bibliography  Save this paper

Designing Consent: Choice Architecture and Consumer Welfare in Data Sharing

Author

Listed:
  • Chiara Farronato
  • Andrey Fradkin
  • Tesary Lin

Abstract

We study the welfare consequences of choice architecture for online privacy using a field experiment that randomizes cookie consent banners. We study three ways in which firms or policymakers can influence choices: (1) nudging users through banner design to encourage acceptance of cookie tracking; (2) setting defaults when users dismiss banners; and (3) implementing consent decisions at the website versus browser level. Absent design manipulation, users accept all cookies more than half of the time. Placing cookie options behind extra clicks strongly influences choices, shifting users toward more easily accessible alternatives. Many users dismiss banners without making an explicit choice, underscoring the importance of default settings. Survey evidence further reveals substantial confusion about default settings. Using a structural model, we find that among consent policies requiring site-specific decisions, consumer surplus is maximized when consent interfaces clearly display all options and default to acceptance in the absence of an explicit choice. However, the welfare gains from optimizing banner design are much smaller than those from adopting browser-level consent, which eliminates the time costs of repeated decisions.

Suggested Citation

  • Chiara Farronato & Andrey Fradkin & Tesary Lin, 2025. "Designing Consent: Choice Architecture and Consumer Welfare in Data Sharing," NBER Working Papers 34025, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:34025
    Note: PR
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w34025.pdf
    Download Restriction: Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:34025. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.