Publication
Title
Opt in versus opt out: a free-entry analysis of privacy policies
Author
Abstract
There is much debate on how the ‡ow of information between …rms should be organized, and whether existing privacy laws should be amended. We o¤er a welfare comparison of the three main current policies towards consumer privacy –anonymity, opt in, and opt out –within a two-period model of localized competition. We show that when consumers …nd it too costly to opt in or opt out –such that the default is the policy that rules, privacy policies shape …rms’ability to collect and use customer information, and a¤ect their pricing strategy and entry decision di¤erently. The free-entry analysis reveals that social welfare is non-monotonic in the degree of privacy protection. Opt out is the socially preferred privacy policy while opt in socially underperforms anonymity. Consumers never opt out and choose to opt in only when its cost is su¢ ciently low. Only when opting in is cost-free do the opt-in and opt-out privacy policies coincide.
Language
English
Source (series)
Research paper / UA, Faculty of Applied Economics , 2007:25
Publication
Antwerp : UA, 2007
Volume/pages
27 p.
Full text (open access)
UAntwerpen
Faculty/Department
Research group
Publication type
Affiliation
Publications with a UAntwerp address
External links
Record
Identification
Creation 08.10.2008
Last edited 23.12.2015
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