Competing in the presence of privacy concerns: a model of the market for customer information

Working papers seriesThere is 'no free disposal' (NFD) in the consumption of online personalization services, as this activity inherently involves sharing of personal and preference information that creates disutilities to the consumer. Not only are more services not necessarily better for the consumer, but these services are also provided for free as firms extract value from the usage of consumer information rather than from directly pricing the services. Further, the services themselves may be provided to a consumer as a fixed-length toolbar/deskbar (fixed-services strategy) or with the option of choosing a subset of the portfolio of services offered (variable-services strategy). This paper models a duopoly of firms that are heterogeneous in their marginal value for consumer information (MVI) and interact through a two-stage dynamic game, where the firms choose a fixed- or variable-services strategy in the first stage and their level of services of-fering in the second. After examining a series of subgame equilibria, we arrive at distinct subgame-perfect Nash equilibriua (SPNEs) that allows us to characterize competition between firms of different MVI endowments. Our findings suggest that while there is no SPNE in a duopoly of two small firms, when one firm is small and the large, there is a unique SPNE in pure strategies where both firms offer fixed-services such that they segment the market. As the differences in their valuations increase, the larger firm continues to offer fixed-services while smaller firm enjoys the option of offering variable services. A duopoly of large firms results always results in symmetric SPNE; both firms offer variable services as long as one firm has very large MVI and both offer fixed-services otherwise. Interestingly while the former is consumer welfare maximizing, the latter results in a third of the market (consisting of privacy seekers) not being served. Our results lead to important managerial and policy implications, as well as interesting extensions to the existing location models.preprin

Competing for Information: A Duopoly of Personalized Service Provision under Privacy Concerns

There is “no free disposal” (NFD) in the consumption of online personalization services, as this activity inherently involves sharing of personal and preference information that creates disutilities to the consumer. Not only are more services not necessarily better for the consumer, but these services are also provided for free as firms extract value from the usage of consumer information rather than from directly pricing the services. Firms may offer personalization through a “take-it or leave-it” approach (the fixed-services strategy) or allow consumers to choose a subset of the portfolio of services offered (the variable-services strategy). We model a duopoly of firms that are heterogeneous in their marginal value for consumer information (MVI) and interact through a two-stage dynamic game, where the firms choose a fixed- or variable-services strategy in the first stage and the corresponding level of services in the second. Our findings suggest that when the MVIs of competing firms are sufficiently different, there is a unique subgame-perfect Nash equilibrium (SPNE) in pure strategies where both firms offer fixed-services such that they segment the market. As the difference in their MVIs increase, the high MVI firm continues to offer fixed-services while the low MVI firm enjoys the option of offering variable services. A duopoly of high MVI firms results in both firms offering variable services as long as one firm has very large MVI, and both offering fixed-services otherwise. Interestingly, while the former is consumer welfare maximizing, the latter results in a third of the market (consisting of privacy seekers) not being served. Our results lead to important managerial and policy implications, as well as interesting extensions to extant location models.published_or_final_versio

Innovative public governance through cloud computing: Information privacy, business models and performance measurement challenges

Purpose: The purpose of this paper is to identify and analyze challenges and to discuss proposed solutions for innovative public governance through cloud computing. Innovative technologies, such as federation of services and cloud computing, can greatly contribute to the provision of e-government services, through scaleable and flexible systems. Furthermore, they can facilitate in reducing costs and overcoming public information segmentation. Nonetheless, when public agencies use these technologies, they encounter several associated organizational and technical changes, as well as significant challenges. Design/methodology/approach: We followed a multidisciplinary perspective (social, behavioral, business and technical) and conducted a conceptual analysis for analyzing the associated challenges. We conducted focus group interviews in two countries for evaluating the performance models that resulted from the conceptual analysis. Findings: This study identifies and analyzes several challenges that may emerge while adopting innovative technologies for public governance and e-government services. Furthermore, it presents suggested solutions deriving from the experience of designing a related platform for public governance, including issues of privacy requirements, proposed business models and key performance indicators for public services on cloud computing. Research limitations/implications: The challenges and solutions discussed are based on the experience gained by designing one platform. However, we rely on issues and challenges collected from four countries. Practical implications: The identification of challenges for innovative design of e-government services through a central portal in Europe and using service federation is expected to inform practitioners in different roles about significant changes across multiple levels that are implied and may accelerate the challenges' resolution. Originality/value: This is the first study that discusses from multiple perspectives and through empirical investigation the challenges to realize public governance through innovative technologies. The results emerge from an actual portal that will function at a European level. © Emerald Group Publishing Limited

A qualitative study of stakeholders' perspectives on the social network service environment

Over two billion people are using the Internet at present, assisted by the mediating activities of software agents which deal with the diversity and complexity of information. There are, however, ethical issues due to the monitoring-and-surveillance, data mining and autonomous nature of software agents. Considering the context, this study aims to comprehend stakeholders' perspectives on the social network service environment in order to identify the main considerations for the design of software agents in social network services in the near future. Twenty-one stakeholders, belonging to three key stakeholder groups, were recruited using a purposive sampling strategy for unstandardised semi-structured e-mail interviews. The interview data were analysed using a qualitative content analysis method. It was possible to identify three main considerations for the design of software agents in social network services, which were classified into the following categories: comprehensive understanding of users' perception of privacy, user type recognition algorithms for software agent development and existing software agents enhancement

Latent segmentation of older adults in the use of social networks and e-banking services

Introduction. This study analyses heterogeneity in the online behaviour of elderly people. Previous research has centred on the socio-demographic segmentation of the elderly regarding their Internet use. Method. The novelty that this study adds is in determining this segmentation through variables that have been especially chosen for studies of the elderly and which are related to their utilitarian use of e-banking, compared to the more hedonic nature of using online social networks. Analysis. The sample was collected using 474 students over 55 years old enrolled in a class of experience in a University in the South of Europe (Spain). We use a latent class cluster model which is appropriate in situations of a posterior segmentation. Results. In dealing with such behaviour in situations of the elderly using these technologies, we have detected the presence of five groups or segments with highly differentiated use-related profiles concerning the variables analysed: venturesomeness, technology anxiety and selfconfidence in information and communication technologies use. Conclusion. We discover the existence of heterogeneity in the behaviour of the elderly regarding services available in Internet. The results support the idea proposed. The stereotype of the elderly cut off from technology is mistaken, as is shown by the different segments found

Profiles of social networking sites users in the Netherlands

Online social networking has become a reality and integral part of the daily personal, social and business life. The extraordinary increase of the user numbers of Social Networking Sites (SNS) and the rampant creation of online communities presents businesses with many challenges and opportunities. From the commercial perspective, the SNS are an interesting and promising field: online social networks are important sources of market intelligence and also offer interesting options for co-operation, networking and marketing. For SMEs especially the Social Networking Sites represent a simple and low cost solution for listening the customer’s voice, reaching potential customers and creating extensive business networks. This paper presents the results of a national survey mapping the demographic, social and behavioral characteristics of the Dutch users of SNS. The study identifies four different user profiles and proposes a segmentation framework as basis for better understanding the nature and behavior of the participants in online communities. The findings present new insights to marketing strategists eager to use the communication potential of such communities; the findings are also interesting for businesses willing to explore the potential of online networking as a low cost yet very efficient alternative to physical, traditional networking

Individual Tariffs for Mobile Communication Services

This paper introduces a conceptual framework and a computational model for individual tariffs for mobile communication services. The purpose is to provide guidance for implementation by communication service suppliers or user groups alike. The paper first examines the sociological and economic incentives for personalized services and individual tariffs. Then it introduces a framework for individual tariffs which is centered on user and supplier behaviours. The user, instead of being fully rational, has "bounded rationality" and his behaviours are subject to economic constraints and influenced by social needs. The supplier can belong to different types of entities such as firms and communities; each has his own goals which lead to different behaviors. Individual tariffs are decided through interactions between the user and the supplier and can be analyzed in a structured way using game theory. A numerical case in mobile music training is developed to illustrate the concepts.risks;mobile communication services;Individual tariffs;computational games

The Role of the Mangement Sciences in Research on Personalization

We present a review of research studies that deal with personalization. We synthesize current knowledge about these areas, and identify issues that we envision will be of interest to researchers working in the management sciences. We take an interdisciplinary approach that spans the areas of economics, marketing, information technology, and operations. We present an overarching framework for personalization that allows us to identify key players in the personalization process, as well as, the key stages of personalization. The framework enables us to examine the strategic role of personalization in the interactions between a firm and other key players in the firm's value system. We review extant literature in the strategic behavior of firms, and discuss opportunities for analytical and empirical research in this regard. Next, we examine how a firm can learn a customer's preferences, which is one of the key components of the personalization process. We use a utility-based approach to formalize such preference functions, and to understand how these preference functions could be learnt based on a customer's interactions with a firm. We identify well-established techniques in management sciences that can be gainfully employed in future research on personalization.CRM, Persoanlization, Marketing, e-commerce,

A survey of 'young social' and 'professional' users of location-based services in the UK

The objective of this study was to assess the response to location-based services (LBS) by three key demographic groups within the United Kingdom. This study took the form of a survey of relevant demographics, attitudes and consumer behaviour undertaken via a web-based survey. Results are based on over 1200 respondents, filtered and segmented into three demographic groups who are typically early adopters of new technology. There were positive attitudes towards a range of LBS, with the major exception being location-based advertising. There were mixed views towards location-based gaming and safety camera information. There were low levels of awareness of many services. The levels of use were typically under 20% for all types of LBS