The first speaker,
will give a presentation on:
(joint with F. Heiny and M.Tolksdorf).
This paper analyzes consumers' privacy choice concerning their data and firms' ensuing pricing strategies. Consumers decide whether to reveal private information in form of cookies. We incorporate this endogenous decision into a duopoly model with behavior-based pricing. We find unique pure-strategy equilibria for two disclosure rules. Under revelation to both firms, consumers disclose their information and firms price discriminate. Under revelation to only one firm, consumers hide their information and firms price uniformly. In our laboratory experiment we confirm these pricing strategies. Consumers, however, have a higher than predicted disclosure rate which is driven by learning effects and privacy concern.
The second speaker
will give a presentation on:
A firm may gain competitive advantage over its rivals through access to market information. Yet evidence suggests only large firms invest in technology that facilitates information provision, potentially contributing to increase their leverage over smaller competitors. This paper aims to empirically investigate how getting access to Big Data information would affect small and medium firms’ performance and decision-making. To do so, we evaluate the impact of an unprecedented Big Data information service diffused at zero cost by a large European bank among its small and medium-size business customers. Upon adoption, the bank provided monthly reports with rich information about each firm’s clientele portfolio and that of its competitors coming from the analysis of Big Data credit card transactions. Using first-differences we find adoption is associated with a 4.5% increase in establishment revenue, whereas IV estimation results show that adoption increases revenue by 9% for those establishments whose adoption decision is most strongly affected by the instrument. The main mechanism behind this result appears to be the information technology prompting establishments to target existing, yet unexploited, business opportunities. Consistent with this mechanism, we find that adopting establishments increase their sales to underserved customer segments. Not only they increase their number of customers, their new customers also come from underrepresented geographic areas and gender-age groups in their customer portfolio prior to adoption. Our evidence is also consistent with establishments improving their resource allocation efficiency upon technology adoption. These findings suggest that small and medium enterprises obtain substantial returns from information access, and therefore, high adoption costs and lack of awareness are likely to be key barriers preventing these firms from investments in Big Data technology.
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