Optimal incentive-compatible priority pricing for the M/M/1 queue
Operations Research
Communications of the ACM
Communications of the ACM
Winner determination in combinatorial auction generalizations
Proceedings of the first international joint conference on Autonomous agents and multiagent systems: part 1
BOB: improved winner determination in combinatorial auctions and generalizations
Artificial Intelligence
Optimal pricing policies of web-enabled application services
Decision Support Systems
The Role of the Management Sciences in Research on Personalization
Management Science
Converting Technology to Mitigate Environmental Damage
Management Science
Nonlinear Pricing of Information Goods
Management Science
Bundling Information Goods of Decreasing Value
Management Science
A model of advertiser--portal contracts: Personalization strategies under privacy concerns
Information Technology and Management
Journal of Management Information Systems
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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.