January 2016
Beginner
256 pages
9h 5m
English
Content preview from Handbook of Media Economics, vol 1B
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there is behavioral price discrimination such as coupons and discounts baked into online
ads. Farrell argues that modeling privacy as an intermediate good protects information
about a consumer’s true willingness to pay which, if revealed, would cost the consumer
substantially more. As set out by
Acquisti and Varian (2005) and Fudenburg and
Villas-Boas (2006)
, conditioning purchase prices on past browsing, can lead to welfare
implications that consumers would rationally seek to avoid.
Behavioral price discrimination means that firms use past consumer actions to distin-
guish between customers who have low and high willingness to pay for their product and
offer them low and high prices as a consequence. One example may be that firms may
offer ads that ...
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