DP16901 Persuasion Through Selective Disclosure: Implications for Marketing, Campaigning, and Privacy Regulation

Author(s): Florian Hoffmann, Roman Inderst, Marco Ottaviani
Publication Date: January 2022
Keyword(s): hypertargeting, limited attention, privacy regulation, Selective disclosure
JEL(s): D83, M31
Programme Areas: Industrial Organization, Political Economy
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16901

This paper characterizes equilibrium persuasion through selective disclosure based on the personal information that senders acquire about the preferences and orientations of receivers, with applications to strategic marketing and campaigning. We derive positive and normative implications depending on: the extent of competition among senders, whether receivers are wary of senders collecting personalized data, and whether firms are able to personalize prices. Privacy laws requiring senders to obtain consent to acquire information are beneficial when there is little or asymmetric competition among senders, when receivers are unwary, and when firms caprice discriminate. Otherwise, policy intervention has unintended negative welfare consequences.