TY - UNPB

T1 - Surfing Incognito: Welfare Effects of Anonymous Shopping

AU - Lagerlof, Johan N. M.

PY - 2018

Y1 - 2018

N2 - This paper studies consumers’ incentives to hide their purchase histories when the seller’s prices depend on previous behavior. Through distinct channels, hiding both hinders and facilitates trade. Indeed, the social optimum involves hiding to some extent, yet not fully. Two opposing effects determine whether a consumer hides too much or too little: the first-period social gains are only partially internalized, and there is a private (socially irrelevant) second-period gain due to price differences. If time discounting is small, the second effect dominates and there is socially excessive hiding. This result is reversed if discounting is large.

AB - This paper studies consumers’ incentives to hide their purchase histories when the seller’s prices depend on previous behavior. Through distinct channels, hiding both hinders and facilitates trade. Indeed, the social optimum involves hiding to some extent, yet not fully. Two opposing effects determine whether a consumer hides too much or too little: the first-period social gains are only partially internalized, and there is a private (socially irrelevant) second-period gain due to price differences. If time discounting is small, the second effect dominates and there is socially excessive hiding. This result is reversed if discounting is large.

KW - behavior-based price discrimination

KW - dynamic pricing

KW - consumer protection

KW - customer recognition

KW - privacy

U2 - 10.2139/ssrn.3301246

DO - 10.2139/ssrn.3301246

M3 - Working paper

T3 - University of Copenhagen. Institute of Economics. Discussion Papers (Online)

BT - Surfing Incognito: Welfare Effects of Anonymous Shopping

ER -