Faculty of Economics and Business Administration Publications Database

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

Hoffmann, Florian
Ottaviani, Marco
ISSN-Print: 0025-1909
Link External Source: Online Version
Year: 2020
Keywords: Selective disclosure; Hypertargeting; Limited attention; Privacy regulation

This paper models how firms or political campaigners (senders) persuade consumers and voters (receivers) by selectively disclosing information about their offering depending on individual receivers' preferences and orientations. 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. We show how both senders and receivers can benefit from selective disclosure. Privacy laws requiring senders to obtain consent to acquire personal information that enables such selective disclosure increases receiver welfare if and only if there is little or asymmetric competition among senders, if receivers are unwary, and if firms can price discriminate.