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Privacy and Persuasion: are we getting the best deal?

Author

Listed:
  • Elias Carroni
  • Luca Ferrari

    (Dipartimento di Scienze per l'Economia e l'Impresa)

  • Simone Righi

Abstract

We shed new lights on the desirability of privacy invasion by web–masters in online markets. We consider website’s users uncertain about their need for a prod- uct and advertisers being offered banner spaces to show their commercials. The latter are designed as bayesian experiments. We show the emergence of different types of advertisement, ranging from fully informative to cheap talk. However, fully–informative banners are never showed if users can privately and costly acquire information about their state of necessity. As a result, when users’ privacy is vio- lated, they buy products they do not need and that they would not have bought if privacy were protected.

Suggested Citation

  • Elias Carroni & Luca Ferrari & Simone Righi, 2017. "Privacy and Persuasion: are we getting the best deal?," Working Papers - Economics wp2017_09.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    • Handle: RePEc:frz:wpaper:wp2017_09.rdf
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    More about this item

    Keywords

    Privacy; Bayesian Persuasion; Advertisement; Targeting.;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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