Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/177605
Authors: 
Carroni, Elias
Ferrari, Luca
Righi, Simone
Year of Publication: 
2018
Series/Report no.: 
Quaderni - Working Paper DSE No. 1116
Abstract: 
Thanks to new digital technologies, web users are continuously targeted by offers that potentially fit their interests even if they are not actively looking for a product. Does this matching always promote transactions with high social value? We consider a model in which web users with state-contingent preferences are targeted by relevant banners. We characterize the optimal strategy of a seller who, in addition to the price of the offered good, designs a banner. We show that, in equilibrium, there is a positive relationship between the price of the offered good and the accuracy of the banner sent to users. Then, we consider the strategic decision of a Platform that attracts sellers because of its targeting abilities and we underline that a reduction in seller's costs may translate into less informative banners and lower prices,fueling purchases of goods that rational individuals may regret due to the persuasive nature of banners.
Subjects: 
Bayesian Persuasion
Targeting
Platforms
JEL: 
D80
D82
D83
L10
M37
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/3.0/
Document Type: 
Working Paper

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