Research
Working Papers
Presentation: Conference on Artificial Intelligence, Machine Learning, and Business Analytics (2022 scheduled), EARIE Annual Conference (2022), ISMS Marketing Science Conference (2022)
Abstract: We develop a general equilibrium model of informative advertising to examine the implications of privacy regulations on consumer welfare, focusing on its utilitarian aspects. In our model, firms reach consumers by placing ads on an advertising platform. Privacy regulations affect ad targetability by either facilitating or hindering the identification of consumers' preferences. The ad platform takes into account the level of targetability it can offer advertisers when choosing ad prices for different products. On the demand side, consumers are heterogeneous in their product preferences, and in how willing they are to consider a non-preferred product.
We show that it is possible for some consumers to exhibit a preference for privacy purely for instrumental reasons. Our analysis characterizes the conditions under which the privacy preferences of different types of consumers will be aligned or opposed. The platform's market power in the ad market and the possibility of cross-selling in the product market---products intended for choosier consumers selling to consumers with flexible preferences under privacy---are critical factors. If all consumers were picky enough to only consider offers of their preferred product, then equilibrium will feature within-product competition only and all consumers (as well as the platform) will be indifferent between privacy and no privacy. On the other hand, if ad prices are exogenous to the privacy regime---as might be the case if the ad market were competitive---then all consumers prefer no privacy.
In the popular discourse the issues around privacy are commonly posed as a tussle between the intrinsic privacy rights of consumers and the greater productivity of advertising under no privacy. This paper suggests that the terms of this debate are too narrow. Consumers can find value in privacy purely for instrumental reasons simply because the presence of consumers with flexible preferences introduces the possibility of greater competition in the product market leading to lower prices and greater consumption for some or all consumers.
Dynamic Personalized Offers while Learning Changing Tastes
Presentation: Young Economist Symposium (2022), Stony Brook International Conference on Game Theory (2022), Asian Meeting of Econometric Society (2022), Annual Canadian Economics Association Conference (2022)
Abstract: Firms selling products to consumers realize that it takes time to learn consumers' preferences (say, by tracking their online behavior). What makes it even more challenging is that consumers' preferences may change over time, depreciating the value of acquired information. How should the firm personalize its offers and change them dynamically to learn as well as adapt to changing tastes? How should consumers behave in light of these dynamic offers? I build a continuous-time bargaining model with one-sided incomplete information where a buyer's binary type is publicly revealed through Brownian motion and the binary type changes via a Poisson process. In equilibrium, firms will start with high prices which will only be accepted by high-type consumers with positive probability and as belief drifts below a certain threshold, the firm will offer the lowest price that will be accepted by both types immediately. Changing tastes have two effects: a level effect that leaves low value consumers less likely to accept a given offer and a slope effect so that the firm screens high value consumers faster. Hence type change benefits both types of consumers at a cost to the firm. If the firm is restricted to constant prices and can use the acquired information to select consumers, it is better off than under dynamic prices. The continuation bargaining process gets resolved slower under fixed prices than under flexible prices, which makes consumers more willing to accept a given offer quicker.
Presentation: Summer School of Econometric Society (2019), Asian Meeting of Econometric Society (2019), Annual Canadian Economics Association Conference (2019), Trans-Atlantic Doctoral Conference (2019), International Industrial Organization Conference (2019)
Abstract: This paper investigates the effect of a tailored news report and its targeted release by an ideologically biased firm. Targeted media strategies include selective information disclosure and audience targeting, with audience targeting being a novel method of distorting information to voters. When the media firm cannot commit to either strategy, targeted media provides are less biased than traditional media. With full commitment in both strategies, however, targeted media do not necessarily generate more bias because selective audience targeting may be more effective in channeling the bias.