The Value of Anonymous Option

Li, Jianpei and Zhang, Wanzhu (2025): The Value of Anonymous Option.

Abstract

Privacy regulations require that sellers obtain explicit consumer consent before collecting personal data. We offer a novel analysis of this requirement by introducing an anonymous option into a repeated-purchase model with limited commitment in which consumers need to be incentivized to disclose their data. We show that despite full surplus extraction through data collection, a monopolist generally benefits from offering the option, as it changes market segmentation, credibly supports a high second-period uniform price, and mitigates the ratchet effect. However, the option may reduce consumer surplus and social welfare due to higher average prices and lower aggregate demand.

• Item Type: MPRA Paper
• Language: English
• Keywords: anonymous option; data disclosure; personalized pricing; privacy regulations
• Subjects: D - Microeconomics > D4 - Market Structure, Pricing, and Design; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance

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