Shreemoy Mishra, Indraprastha Institute of Information Technology, Delhi

I study the market for consumer information. Consumers make sequential purchase decisions from two firms. Consumer valuations for the two goods are positively correlated so the second firm can use purchase history for targeted pricing.  In the literature, rational consumers strategically delay purchase which eliminates the value of disclosed information. In contrast, I present simple conditions under which purchase history is valuable and can be sold. The key conditions are: (i) consumer reservation values are persistent but uncertain (e.g. Markovian), (ii) firms lack the ability to commit to privacy,  and (iii) the second firm is only moderately optimistic about  the demand for its product.

 

Keywords: Consumer Privacy, Dynamic Pricing, Behavioral Targeting