Institutional Affiliation: Columbia University
|The Economic Consequences of Data Privacy Regulation: Empirical Evidence from GDPR|
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This paper studies the effects of the EU’s General Data Protection Regulation (GDPR) on the ability of firms to collect consumer data, identify consumers over time, accrue revenue via online advertising, and predict their behavior. Utilizing a novel dataset by an intermediary that spans much of the online travel industry, we perform a difference-in-differences analysis that exploits the geographic reach of GDPR. We find a 12.5% drop in the intermediary-observed consumers as a result of the new opt-in requirement of GDPR. At the same time, the remaining consumers are observable for a longer period of time. We provide evidence that this pattern is consistent with the hypothesis that privacy-conscious consumers substitute away from less efficient privacy protection (e.g, cookie deletion) to e...
|Minimizing Justified Envy in School Choice: The Design of New Orleans' OneApp|
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In 2012, New Orleans Recovery School District (RSD) became the first U.S. district to unify charter and traditional public school admissions in a single-offer assignment mechanism known as OneApp. The RSD also became the first district to use a mechanism based on Top Trading Cycles (TTC) in a real-life allocation problem. Since TTC was originally devised for settings in which agents have endowments, there is no formal rationale for TTC in school choice. In particular, TTC is a Pareto efficient and strategy-proof mechanism, but so are other mechanisms. We show that TTC is constrained-optimal in the following sense: TTC minimizes justified envy among all Pareto efficient and strategy-proof mechanisms when each school has one seat. When schools have more than one seat, there are multiple poss...
|Strategic Judgment Proofing|
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A liquidity-constrained entrepreneur needs to raise capital to finance a business activity that may cause injuries to third parties -- the tort victims. Taking the level of borrowing as fixed, the entrepreneur finances the activity with senior (secured) debt in order to shield assets from the tort victims in bankruptcy. Interestingly, senior debt serves the interests of society more broadly: it creates better incentives for the entrepreneur to take precautions than either junior debt or outside equity. Unfortunately, the entrepreneur will raise a socially excessive amount of senior debt. Giving tort victims priority over senior debtholders in bankruptcy prevents over-leveraging but leads to suboptimal incentives. Lender liability exacerbates the incentive problem even further. A Limited Se...
Published: Yeon-Koo Che & Kathryn E. Spier, 2008. "Strategic judgment proofing," RAND Journal of Economics, RAND Corporation, vol. 39(4), pages 926-948. citation courtesy of
|Decoupling Liability: Optimal Incentives for Care and Litigation|
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A "decoupled" liability system is one in which the award to the plaintiff differs from the payment by the defendant. The optimal system of decoupling makes the defendant's payment as high as possible. Such a policy allows the award to the plaintiff to be lowered, thereby reducing the plaintiff's incentive to sue -- and hence litigation costs -- without sacrificing the defendant's incentive to exercise care. The optimal award to the plaintiff may be less than or greater than the optimal payment by the defendant. The possibility of an out-of-court settlement does not qualitatively affect these results. If the settlement can be monitored, it may be desirable to decouple it as well.
Published: Rand Journal of Economics, Vol 44, No. 4, pp. 562-570, (Winter 1991). citation courtesy of