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Hidir, Sinem and Vellodi, Nikhil (2021) Privacy, personalization and price discrimination. Journal of the European Economic Association, 19 (2). pp. 1342-1363. doi:10.1093/jeea/jvaa027
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WRAP-privacy-personalization-price-discrimination-Hidir-2020.pdf - Accepted Version Embargoed item. Restricted access to Repository staff only until 5 June 2022. Contact author directly, specifying your specific needs. - Requires a PDF viewer. Download (879Kb) |
Official URL: https://doi.org/10.1093/jeea/jvaa027
Abstract
We study a bilateral trade setting in which a buyer has private valuations over a multi-product seller’s inventory. We introduce the notion of an incentive-compatible market segmentation (IC-MS)—a market segmentation compatible with the buyer’s incentives to voluntarily reveal their preferences. Our main result is a characterization of the buyer-optimal IC-MS. It is partially revealing, comprised primarily of pooling segments wide enough to keep prices low but narrow enough to ensure trade over relevant products. We use our results to study a novel design problem in which a retail platform seeks to attract consumers by calibrating the coarseness of its search interface. Our analysis speaks directly to consumer privacy and the debate regarding product steering versus price discrimination in online retail.
| Item Type: | Journal Article | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Subjects: | H Social Sciences > HF Commerce | ||||||||
| Divisions: | Faculty of Social Sciences > Economics | ||||||||
| Library of Congress Subject Headings (LCSH): | Market segmentation, Price discrimination, Product management | ||||||||
| Journal or Publication Title: | Journal of the European Economic Association | ||||||||
| Publisher: | Oxford University Press | ||||||||
| ISSN: | 1542-4766 | ||||||||
| Official Date: | April 2021 | ||||||||
| Dates: |
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| Volume: | 19 | ||||||||
| Number: | 2 | ||||||||
| Page Range: | pp. 1342-1363 | ||||||||
| DOI: | 10.1093/jeea/jvaa027 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Publisher Statement: | This is a pre-copyedited, author-produced version of an article accepted for publication in Journal of the European Economic Association following peer review. The version of record Sinem Hidir, Nikhil Vellodi, Privacy, Personalization and Price Discrimination, Journal of the European Economic Association, , jvaa027, https://doi.org/10.1093/jeea/jvaa027 is available online at: https://doi.org/10.1093/jeea/jvaa027 | ||||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||||
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