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

By collecting personalized data, Örms and political campaigners (senders) are able to better tailor their communication to the preferences and orientations of individual consumers and voters (receivers). This paper characterizes equilibrium persuasion through selective disclosure of the information that senders acquire about the preferences of receivers. We derive positive and normative implications depending on: the extent of competition among senders, whether receivers make individual or collective decisions, whether Örms are able to personalize prices, and whether receivers are wary of the sendersíincentives to become better informed. We Önd that privacy laws requiring senders to obtain consent to acquire information are beneÖcial when there is little or asymmetric competition among Örms or candidates, when receivers are unwary, and when Örms can price discriminate. Otherwise, policy intervention has unintended negative welfare consequences.