Item
Targeted Advertising as an Implicit Recommendation and Personal Data Opt-Out
- Author
- Z. Eddie Ning, Jiwoong Shin, Jungju Yu
- Year
- 2023
- Publisher
- USC, Yale, and the UTD FORMS conference
- DOI/Link
- View Source
- Abstract
- The study examines how targeted advertising acts as an implicit recommendation to consumers who are uncertain about their product preferences. It explores the "misaligned incentives" that arise as targeting accuracy improves: while a more accurate algorithm strengthens the recommendation effect, it also increases an advertiser's incentive to "cheat" by targeting consumers who are a bad fit. The paper finds that under exogenous pricing, consumers may still benefit from improved accuracy, but under endogenous pricing, firms may raise prices to capture the surplus, potentially leading consumers to opt out of data collection to protect their privacy.
- Language
- English