Privacy Regulation and Its Unintended Consequence on Consumption Behaviors: Evidence From CCPA

2023 | International Conference on Information Systems | Citations: 0

Authors: Bae, Donghwa; Mayya, Raveesh; Nian, Tingting

Abstract: This study explores the unintended consequences of data protection regulations ... Expand

Abstract: This study explores the unintended consequences of data protection regulations on consumer behavior. Specifically, we examine the California Consumer Privacy Act, which restricts companies from collecting Californians' personal information. Privacy regulations may limit firms' ability to suggest products aligned with consumers' taste predicted from data, potentially influencing subsequent consumer behavior. These regulations especially pose a challenge to digital platforms, as their success hinges on seamless data flow between firms and consumers. Using a difference-in-differences approach with transaction data, we find that post-CCPA, Californians reduce purchase by 4.1%, increase returns by 2.9%. Moreover, we find that Californians spend more time online and visit more webpages, potentially indicating increased search efforts. Mechanism analysis suggests that firms under CCPA proactively alter their data collection strategy to reduce the liability. These results reveal the complex interplay between privacy regulation and consumer behavior, highlighting the need for a nuanced understanding of the trade-offs between privacy protection and economic outcomes. Collapse

Topics: information privacy law legal context consumer behavior advertising management website

Methods: experimental group longitudinal research natural experiment archival research difference in differences

Competing on price and guarantee compensation: Heeding cloud consumer's quality perception

2023 | Information & Management | Citations: 0

Authors: Chen, Fuzan; Lu, Aijun; Wu, Harris; Li, Minqiang; Feng, Haiyang

Abstract: As frequent service failures raise user concerns, guarantee compensation has bec ... Expand

Abstract: As frequent service failures raise user concerns, guarantee compensation has become a competitive instrument for cloud service providers (CSPs) in addition to price. This study proposes a game-theoretical model where two CSPs compete on both price and compensation. We consider two roles of compensation: (1) remedying user losses and (2) helping users to form quality perception. The results indicate that the higher-quality CSP should always guarantee higher compensation but may not always charge a higher price. We further investigate the signaling policies and find that the lower-quality CSP is more likely to signal a higher-than-actual quality. Collapse

Topics: IS economics consumer surplus service quality cloud computing privacy

Methods: game theoretical model optimization model cross sectional research theory development experiment

Theories: game theory

Product Recommendation and Consumer Search

2023 | Journal of Management Information Systems | Citations: 0

Authors: Choudhary, Vidyanand; Zhang, Zhe

Abstract: We study an online environment where a firm provides strategic product recommend ... Expand

Abstract: We study an online environment where a firm provides strategic product recommendations to consumers. We develop an analytical framework to integrate recommendations into the consumer search process. The firm sells two imperfectly substitutable products with different profit margins and makes a personalized product recommendation to each consumer based on its uncertainty (lack of knowledge) of his preferences. We define recommendation bias as the firm's deliberate decision to recommend a product to a consumer that does not minimize expected misfit cost of the consumer. Consumers can accept the product recommendation, search for the nonrecommended product, or leave the website. We identify five consumer segments based on consumers' responses to the firm's recommendations. We show that the recommendation bias, profit, and consumer surplus depend on the interaction between the firm's uncertainty regarding consumer preferences and consumer search costs. A reduction in its uncertainty about consumers leads to a corresponding increase in the firm's profit but does not necessarily result in a reduction in consumer surplus. An increase in search costs can lead to nonmonotonic changes in the firm's recommendation strategy, causing an increase or decrease in recommendation bias when the firm's uncertainty about consumers is low. Furthermore, the firm's profit can behave non-monotonically with respect to search costs: the firm benefits from an increase in search costs when these costs are small and uncertainty about consumers is low, but it can be adversely affected when search costs are moderate. Interestingly, consumer surplus may increase when search costs increase. Collapse

Topics: consumer surplus IS economics website recommender system digital service

Methods: mathematical model

Theories: economic theory

Discontinuous Technological Change and Relaxations of Regulatory Restrictions to Achieve Societal Objectives for the Environment, with Focus on IP Protections

2023 | HICSS | Citations: 0

Authors: Clemons, Eric; Schreieck, Maximilian

Abstract: We address cases where improvements in information technology for measurement an ... Expand

Abstract: We address cases where improvements in information technology for measurement and monitoring should result in regulatory relaxation, in contrast with much recent research, which focuses on situations where these improvements should result in increased regulatory restrictions on the actions permitted by large platform operators. We focus specifically on the problem of reducing environmental degradation, and we explore how regulatory restrictions associated with intellectual property (IP) rights should be relaxed in the presence of demonstrable reductions in environmental impact that result from improvements made by parties other than the owners of the IP. We explore how Environmental Impact Merit should be used to compel the owner of the IP to adopt improvements and to compel compensation to the improver. Future research will develop additional examples where regulatory relaxation is appropriate. Collapse

Topics: consumer surplus IS economics innovation management intellectual property business process improvement

Methods: literature sample

Theories: punctuated equilibrium theory

Sequential IT Investment: Can the Risk of IT Implementation Failure Be Your Friend?

2023 | Information Systems Research | Citations: 0

Authors: Choudhary, Vidyanand; Xin, Mingdi; Zhang, Zhe

Abstract: An extensive literature studies the benefits for a firm to be the first to inves ... Expand

Abstract: An extensive literature studies the benefits for a firm to be the first to invest in innovative technologies such as information technologies (ITs). However, IT investment often faces the risk of implementation failure. How would such risk affect an early adopter’s incentive to invest? Do late adopters benefit from information about the early adopter’s investment? In this paper, we investigate these questions in a context in which two firms, a leader and a follower, invest in a cost-reducing IT sequentially. This paper differs from prior literature in two aspects: First, IT adoption is nonexclusive and available to all client firms. Second, IT implementation can fail. In this case, the follower may have information about the leader’s IT investment level or implementation outcome before making an investment decision. We use a Hotelling model of duopoly competition to examine how IT implementation failure risks and the follower’s knowledge about the leader’s IT investment may affect the firms’ incentive to sequentially invest in IT. Our results show that the risk of IT implementation failure impacts the firms’ investment incentives and profits through three distinct effects: the first mover advantage mitigation; competition mitigation; and uncertainty-driven, cost-based differentiation effects, and these three effects may drive the firms’ investment and profits in opposite directions. The follower’s knowledge about the leader’s IT investment level before making an IT investment decision gives the leader a first mover advantage and the follower a disadvantage. In contrast, the follower’s knowledge about the leader’s IT implementation outcome can benefit both the leader and the follower. Finally, we find that a spaced-out sequential IT investment schedule, in which the follower makes the investment decision after the leader’s IT investment level and implementation outcome are both known, leads to the highest industry-wide IT investment and social surplus. History: Kai-Lung Hui, Senior Editor; Sameer Hasija, Associate Editor. Supplemental Material: The online appendix is available at https://doi.org/10.1287/isre.2022.1115. Collapse

Topics: IT investment systems implementation IS economics IS implementation success economic surplus

Theories: prisoner's dilemma game theory

Fair Play for Fair Pay: Fighting Digital Piracy through Revenue Sharing

2023 | International Conference on Information Systems | Citations: 0

Authors: Fereidouni, Meysam; Vijairaghavan, Vaarun

Abstract: ... Expand

Abstract: Collapse

Topics: digital piracy IS economics participatory design consumer surplus producer surplus

Methods: design methodology

Theories: game theory

To Brush or Not to Brush: Product Rankings, Consumer Search, and Fake Orders

2023 | Information Systems Research | Citations: 0

Authors: Jin, Chen; Yang, Luyi; Hosanagar, Kartik

Abstract: Brushing—online merchants placing fake orders of their own products—has been a w ... Expand

Abstract: Brushing—online merchants placing fake orders of their own products—has been a widespread phenomenon on major e-commerce platforms. One key reason why merchants brush is that it boosts their rankings in search results. Products with higher sales volume are more likely to rank higher. Additionally, rankings matter because consumers face search frictions and narrow their attention to only the few products that show up at the top. Thus, fake orders can affect consumer choice. We focus on this search-ranking aspect of brushing and build a stylized model to understand merchants’ strategic brushing behavior as well as how it affects consumers. We consider a high-type merchant (who sells a more popular product) and a low-type merchant (who sells a less popular product) competing on an e-commerce platform where product rankings evolve over time. We find that if brushing gets more costly for merchants (e.g., due to stricter platform policies), it may sometimes surprisingly harm consumers as it may only blunt brushing by the high-type merchant but intensify brushing by the low-type merchant. If search is less costly for consumers (e.g., due to improved search technologies), it may not always benefit consumers, either. Moreover, the design of the ranking algorithm is critical: placing more weight on sales-volume-related factors may trigger a nonmonotone change in consumer welfare; tracking recent sales only as opposed to cumulative sales does not always dial down brushing and, in fact, may sometimes cause the low-type merchant to brush more.History: Ravi Bapna, Senior Editor; De Liu, Associate Editor.Funding: C. Jin gratefully acknowledges the Singapore Ministry of Education Academic Research Fund [Tier 1, Grant R-253-000-144-133], The Wharton School Dean’s Postdoctoral Research Fund, and Mack Institute Research Fund. All authors gratefully acknowledge the 2019 Networks, Electronic Commerce and Telecommunications Institute (NET) Summer Research Grant.Supplemental Material: The online appendices are available at https://doi.org/10.1287/isre.2022.1128. Collapse

Topics: IS economics consumer surplus electronic commerce fake review electronic market

Methods: computational algorithm literature sample

Theories: economic search theory

Dark Sides of the Platform Economy: Market Power and Its Abuse by Platform Orchestrators

2023 | European Conference On Information Systems | Citations: 0

Authors: Kölbel, Tobias; Kunz, Daniel; Lamberty, Ricky

Abstract: Platforms drive the 21st century with orchestrating gatekeepers dominating the ... Expand

Abstract: Platforms drive the 21st century with orchestrating gatekeepers dominating the digital economy. Simultaneously, IT policymakers are increasingly concerned with antitrust regulation in the digital realm, abuse of market power, and monopolization cases against the most prominent digital platforms. This paper contributes to this ongoing debate by presenting the Platform Power Abuse Taxonomy. We provide an overview of abusive behaviors, considering the market position of platform orchestrators and differentiating platform types and affected market participants. Adopting a cross-platform approach, we rigorously analyze orchestrators' abuse vehicles and abuse tools to exploit their dominant position by incorporating findings from literature and real-world contexts. Collapse

Topics: electronic market digital platform price management legal context user interface

Methods: literature study literature sample case study qualitative interview structured literature research

Theories: lemon market theory

Who Should Own the Data? The Impact of Data Ownership Shift from the Service Provider to Consumers

2023 | Journal of Management Information Systems | Citations: 0

Authors: Li, Shilei; Liu, Yang; Feng, Juan

Abstract: With the wide use of information technologies including Big Data and artificial ... Expand

Abstract: With the wide use of information technologies including Big Data and artificial intelligence (AI), consumers' personal actions (their search history, transaction records, click-through behaviors, etc.) can be tracked, recorded and analyzed by the service provider (e.g., Google) to provide personalized services. Under the current regime, consumers usually hand over their personal data for free in exchange for high-quality services. As it becomes more and more commonly accepted that "data is property," should consumers be entitled to claim their property rights over their personal data? New technologies emerge to empower consumers to control their own data, and the service provider may need to compensate for the usage of such data. How consumers and the service provider should react to such technologies, however, is not clear. We build a theoretical model in which consumers have different sensitivities towards their data ownership. We show that the impact of the data ownership shift depends not only on the service provider's revenue structure and the discount in the service quality offered to non-data-providing consumers, but also on whether and how consumers are compensated. More importantly, if the service provider can endogenously adjust the qualities of services provided to consumers, the shift of data ownership may not necessarily benefit consumers, or harm the service provider. We also offer guidelines for data regulation policy designs. Collapse

Topics: service quality IS economics consumer surplus economic surplus privacy

Methods: archival research optimization model theory development literature study

Theories: privacy calculus theory social exchange theory

Two-tier regulation models for the user-generated content platform: A game theoretic analysis

2023 | Decision Support Systems | Citations: 0

Authors: Nan, Guofang; Ding, Ning; Li, Guangyu; Li, Zhiyong; Li, Dahui

Abstract: This paper explores the optimal regulation strategies of the government and plat ... Expand

Abstract: This paper explores the optimal regulation strategies of the government and platforms to provide guidelines for how to maintain the order of user-generated content platforms and prevent adverse social events. The platform decides the intensity of regulation measures to be implemented on its content, and the government decides to enforce either direct or indirect regulation on platform content. The main result is that the platform’s regulation strategy depends on the relationship between the loss and fine caused by adverse social events and the cost to improve regulation intensity. We find that the optimal regulation strategy of the government depends largely on the potential probability occurrence of adverse social events and the efficiency of direct regulation. Competition prompts platforms to reduce regulation intensity, and counterintuitively, platform users can benefit from fierce competition. However, weak competition may result in lower consumer surplus in a duopoly market than in a monopoly market. In a duopoly market with greatly disparate intrinsic values of two platforms, the government can appropriately relax regulations. Collapse

Topics: duopoly IS economics consumer surplus user-generated content Facebook

Theories: game theory