Working Paper: CEPR ID: DP13686
Authors: Nikita Roketskiy; Venkataraman Bhaskar
Abstract: We examine the implications of consumer privacy when preferences today depend upon past consumption choices, and consumers shop from different sellers in each period. Although consumers are ex ante identical, their initial consumption choices cannot be deterministic. Thus ex post heterogeneity in preferences arises endogenously. Consumer privacy improves social welfare, consumer surplus and the profits of the second-period seller, while reducing the profits of the first period seller, relative to the situation where consumption choices are observed by the later seller.
Keywords: Consumer Privacy; Dynamic Demand; Endogenous Screening; Nonlinear Pricing
JEL Codes: D11; D43; L13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Consumer privacy (D18) | improved social welfare (I39) |
| Consumer privacy (D18) | consumer surplus (D46) |
| Consumer privacy (D18) | profits of second-period seller (D41) |
| Consumer privacy (D18) | profits of first-period seller (D41) |
| Consumer privacy (D18) | changes in consumption choices between periods (D15) |
| Consumer privacy (D18) | market dynamics (D49) |