How does protecting the privacy of consumers affect the value of their personal data? We model an intermediary that uses consumers' data to influence the price 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 consumers' privacy has complex effects. It can increase the value of some consumers' data while decreasing that of others. Additionally, it can have redistributive effects, by benefiting some consumers at the expense of others. Furthermore, it can increase average prices and reduce trade.

Jacopo Perego and Simone Galperti
Journal Article
Publication Date
American Economic Association, P&P

Full Citation

Perego, Jacopo and Simone Galperti
. “Privacy and the Value of Data.”
American Economic Association, P&P