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The Value of Anonymous Option

Author

Listed:
  • Li, Jianpei
  • Zhang, Wanzhu

Abstract

Privacy regulations require that sellers obtain explicit consumer consent before collecting personal data. We formalize this requirement by introducing an anonymous option, which allows consumers to maintain anonymity during transactions. In a repeated-purchase model under limited commitment, we examine a monopolist's incentives to offer this option and its welfare implications. Despite full surplus extraction through data collection, the seller generally benefits from the option, as it credibly supports a high second-period uniform price and mitigates the ratchet effect. However, the option may reduce consumer surplus and social welfare due to higher average prices and lower aggregate demand.

Suggested Citation

  • Li, Jianpei & Zhang, Wanzhu, 2025. "The Value of Anonymous Option," MPRA Paper 124009, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:124009
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    File URL: https://mpra.ub.uni-muenchen.de/124009/1/MPRA_paper_124009.pdf
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    More about this item

    Keywords

    anonymous option; data disclosure; personalized pricing; privacy concern;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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