Imperial College London
Alternate

DrJiahuaWu

Business School

Associate Professor of Operations
 
 
 
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Contact

 

+44 (0)20 7594 9851j.wu CV

 
 
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Location

 

386ABusiness School BuildingSouth Kensington Campus

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Summary

 

Publications

Citation

BibTex format

@article{Valletti:2020:10.1111/poms.13108,
author = {Valletti, T and Wu, J},
doi = {10.1111/poms.13108},
journal = {Production and Operations Management},
pages = {309--329},
title = {Consumer profiling with data requirements: structure and policy implications},
url = {http://dx.doi.org/10.1111/poms.13108},
volume = {29},
year = {2020}
}
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RIS format (EndNote, RefMan)

TY  - JOUR
AB  - We consider a model where a monopolist can profile consumers in order to price discriminate among them, and consumers can take costly actions to protect their identities and make the profiling technology less effective. A novel aspect of the model consists in the profiling technology: the signal that the monopolist gets about a consumer’s willingnesstopay can be made more accurate either by having more consumers revealing their identities, or by spending larger amounts of money (e.g., on thirdparty complementary data or data analytics capabilities). We show that both consumer surplus and social welfare are convex in the ability of consumers to conceal their identities. The interest of this result stems from the fact that consumers’ concealing cost can be interpreted as a policy tool: a stricter privacy law would make the concealing cost lower, and viceversa. Consequently, a policymaker who promotes total welfare should either make data protection very easy or very costly. The right direction of data regulations depends on data requirements. In particular, a higher (lower) data requirement is an instance when more (less) consumers are needed to achieve the same signal precision. We show that a strict data privacy law is preferable under a high data requirement so that firms are less likely to invest in profiling inefficiently, whereas there is less concern with little or no data regulations under a low data requirement. We also discuss when greater data protection may be beneficial to the firm.
AU  - Valletti,T
AU  - Wu,J
DO  - 10.1111/poms.13108
EP  - 329
PY  - 2020///
SN  - 1059-1478
SP  - 309
TI  - Consumer profiling with data requirements: structure and policy implications
T2  - Production and Operations Management
UR  - http://dx.doi.org/10.1111/poms.13108
UR  - https://onlinelibrary.wiley.com/doi/full/10.1111/poms.13108
UR  - http://hdl.handle.net/10044/1/73064
VL  - 29
ER  -
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