The economics of advertising and privacy

One of the new realities of advertising is that personal information can be used to ensure that advertising is only shown and designed for a select group of consumers who stand to gain most from this information. However, to gather the data used for targeting requires some degree of privacy intrusion by advertisers. This sets up a tradeoff between the informativeness of advertising and the degree of privacy intrusion. This paper summarizes recent empirical research that illuminates this tradeoff.

[1]  H. Varian,et al.  Conditioning Prices on Purchase History , 2005 .

[2]  J. Turow,et al.  Americans Reject Tailored Advertising and Three Activities that Enable It , 2009 .

[3]  Avi Goldfarb,et al.  Online Display Advertising: Targeting and Obtrusiveness , 2011, Mark. Sci..

[4]  J. Brehm,et al.  Psychological Reactance: Theory and Applications , 1989 .

[5]  K. Hui,et al.  Economics of Privacy , 2005 .

[6]  E. Chamberlin.  The Theory of Monopolistic Competition , 1933 .

[7]  Justin P. Johnson.  Targeted Advertising and Advertising Avoidance , 2011 .

[8]  Catherine Tucker.  Social Advertising: How Advertising that Explicitly Promotes Social Influence Can Backfire , 2016 .

[9]  Catherine E. Tucker,et al.  When Does Retargeting Work ? Timing Information Specificity ∗ , 2011 .

[10]  T. Hendershott.  Economics and Information Systems , 2006 .

[11]  Ron Shachar,et al.  Targeted advertising as a signal , 2009 .

[12]  E. Chamberlin.  The Theory of Monopolistic Competition , 1933 .

[13]  Gerard R. Butters.  Equilibrium Distributions of Sales and Advertising Prices , 1977 .

[14]  R. Kihlstrom,et al.  Advertising as a Signal , 1984, Journal of Political Economy.

[15]  M. Culnan,et al.  Information Privacy Concerns, Procedural Fairness, and Impersonal Trust: An Empirical Investigation , 1999 .

[16]  Wayne D. Hoyer,et al.  Variables affecting perceptions of invasion of privacy in a personnel selection situation. , 1980 .

[17]  David S. Evans.  The Online Advertising Industry: Economics, Evolution, and Privacy , 2009 .

[18]  R. A. Wicklund,et al.  Consumer Behavior and Psychological Reactance , 1980 .

[19]  Catherine Tucker,et al.  Social Networks, Personalized Advertising, and Privacy Controls , 2013 .

[20]  Avi Goldfarb,et al.  Search Engine Advertising: Channel Substitution when Pricing Ads to Context , 2010, Manag. Sci..

[21]  L. E. Fouraker,et al.  The Theory of Monopolistic Competition , 1933 .

[22]  Avi Goldfarb,et al.  Privacy Regulation and Online Advertising , 2010, Manag. Sci..

[23]  S. Shavitt,et al.  Getting too personal: Reactance to highly personalized email solicitations , 2008 .

[24]  Benjamin E. Hermalin,et al.  Privacy, property rights and efficiency: The economics of privacy as secrecy , 2006 .

[25]  Naresh K. Malhotra,et al.  Internet Users' Information Privacy Concerns (IUIPC): The Construct, the Scale, and a Causal Model , 2004, Inf. Syst. Res..

[26]  J. Brehm.  A theory of psychological reactance. , 1981 .

[27]  Sören Preibusch,et al.  Unwillingness to Pay for Privacy: A Field Experiment , 2011, SSRN Electronic Journal.

[28]  D. Fudenberg,et al.  Chapter 7 Behavior-Based Price Discrimination and Customer Recognition , 2006 .

[29]  Shelley E. Taylor.  Hospital Patient Behavior: Reactance, Helplessness, or Control? , 1979 .