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Privacy and the Value of Data

Author

Listed:
  • Simone Galperti
  • Jacopo Perego

Abstract

How does protecting consumers' privacy affect the value of their personal data? We model an intermediary that uses consumers' data to influence prices set by a seller. When privacy is protected, consumers choose whether to disclose their data to the intermediary. When privacy is not protected, the intermediary can access consumers' data without their consent. We illustrate that protecting privacy has complex effects. It can increase the value of some consumers' data while decreasing that of others. It can have redistributive effects, by benefiting some consumers at the expense of others. Finally, it can increase average prices and reduce trade.

Suggested Citation

  • Simone Galperti & Jacopo Perego, 2023. "Privacy and the Value of Data," AEA Papers and Proceedings, American Economic Association, vol. 113, pages 197-203, May.
    • Handle: RePEc:aea:apandp:v:113:y:2023:p:197-203
    DOI: 10.1257/pandp.20231084
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    More about this item

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • K24 - Law and Economics - - Regulation and Business Law - - - Cyber Law

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