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Mechanism design for "free" but "no free disposal" services / Ramnath K. Chellappa in Management science, Vol. 56 N° 10 (Octobre 2010) 

Public ISBD [article]  in Management science > Vol. 56 N° 10 (Octobre 2010) . - pp. 1766-1780 Titre : Mechanism design for "free" but "no free disposal" services : The economics of personalization under privacy concerns Type de document : texte imprimé Auteurs : Ramnath K. Chellappa, Auteur ; Shivendu Shivendu, Auteur Année de publication : 2010 Article en page(s) : pp. 1766-1780 Note générale : Management Langues : Anglais (eng) Mots-clés : Incentives  Mechanism  design  Personalization  Privacy  No  free  disposal Index. décimale : 658 Organisation des entreprises. Techniques du commerce Résumé : Online personalization services belong to a class of economic goods with a "no free disposal" (NFD) property where consumers do not always prefer more services to less because of the privacy concerns. These concerns arise from the revelation of information necessary for the provision of personalization services. We examine vendor strategies in a market where consumers have heterogeneous concerns about privacy. In successive generalizations, we allow the vendor to offer a fixed level of personalization, variable levels of personalization, and monetary transfers (coupons) to the consumers that depend on the level of personalization chosen. We show that a vendor offering a fixed level of personalization does not offer a coupon unless his marginal value of information (MVI) is sufficiently high, and even when personalization is costless, the vendor does not cover the market. Under a fixed services offering, the vendor serves the same market with or without couponing. Next, we demonstrate that in the absence of couponing, the vendor's optimal variable personalization services contract maximizes surplus for all heterogeneous consumers, which is in contrast to standard results from monopolistic screening. When the vendor can offer coupons that vary according to personalization levels, the optimal contract is not fully revealing unless his MVI is high and he will not offer coupons when this MVI is low. However, a vendor with a moderate MVI (between certain thresholds) offers a bunched contract, wherein consumers with low privacy concerns receive a variable services-coupon contract, those with moderate privacy concerns receive a fixed services-coupon contract, and those with high privacy concerns do not participate in the market. The coupon value is decreasing in privacy sensitivity of consumers. DEWEY : 658 ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/cgi/content/abstract/56/10/1766 [article] Mechanism design for "free" but "no free disposal" services : The economics of personalization under privacy concerns [texte imprimé] / Ramnath K. Chellappa, Auteur ; Shivendu Shivendu, Auteur . - 2010 . - pp. 1766-1780. Management Langues : Anglais (eng) in Management science > Vol. 56 N° 10 (Octobre 2010) . - pp. 1766-1780 Mots-clés : Incentives  Mechanism  design  Personalization  Privacy  No  free  disposal Index. décimale : 658 Organisation des entreprises. Techniques du commerce Résumé : Online personalization services belong to a class of economic goods with a "no free disposal" (NFD) property where consumers do not always prefer more services to less because of the privacy concerns. These concerns arise from the revelation of information necessary for the provision of personalization services. We examine vendor strategies in a market where consumers have heterogeneous concerns about privacy. In successive generalizations, we allow the vendor to offer a fixed level of personalization, variable levels of personalization, and monetary transfers (coupons) to the consumers that depend on the level of personalization chosen. We show that a vendor offering a fixed level of personalization does not offer a coupon unless his marginal value of information (MVI) is sufficiently high, and even when personalization is costless, the vendor does not cover the market. Under a fixed services offering, the vendor serves the same market with or without couponing. Next, we demonstrate that in the absence of couponing, the vendor's optimal variable personalization services contract maximizes surplus for all heterogeneous consumers, which is in contrast to standard results from monopolistic screening. When the vendor can offer coupons that vary according to personalization levels, the optimal contract is not fully revealing unless his MVI is high and he will not offer coupons when this MVI is low. However, a vendor with a moderate MVI (between certain thresholds) offers a bunched contract, wherein consumers with low privacy concerns receive a variable services-coupon contract, those with moderate privacy concerns receive a fixed services-coupon contract, and those with high privacy concerns do not participate in the market. The coupon value is decreasing in privacy sensitivity of consumers. DEWEY : 658 ISSN : 0025-1909 En ligne : http://mansci.journal.informs.org/cgi/content/abstract/56/10/1766