We shed light on a money-for-privacy trade-off in the market for smartphone applications (“apps”). Developers offer their apps at lower prices in return for greater access to personal information, and consumers choose between low prices and more privacy. We provide evidence for this pattern using data from 300,000 apps obtained from the Google Play Store (formerly Android Market) in 2012 and 2014. Our findings show that the market’s supply and demand sides both consider an app’s ability to collect private information, measured by the apps’s use of privacy-sensitive permissions: (1) cheaper apps use more privacy-sensitive permissions; (2) given price and functionality, demand is lower for apps with sensitive permissions; and (3) the strength of this relationship depends on contextual factors, such as the targeted user group, the app’s previous success, and its category. Our results are robust and consistent across several robustness checks, including the use of panel data, a difference-in-differences analysis, “twin” pairs of apps, and various measures of privacy-sensitivity and app demand. This paper was accepted by Anandhi Bharadwaj, information systems.

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp10022.pdf 99c: Price-Points in E-Commerce: Non -Technical SummaryThis paper attempts to shed light on the pricing behaviour of firms or sellers in market places with price competition. In particular, it aims at testing the mechanism that lies at the heart of one of the most famous models in economics, namely the Bertrand model of competition. This model suggests that firms' profits will be zero as soon as there are at least two sellers in the market. The model is built on the idea that consumers will go to the cheapest shop, even if the differences in prices are "infinitesimal". As a result, firms are tempted to undercut their opponents' price by a small amount and they do so over and over until they end up charging the cost at which they produce their products.However, the underlying assumption is at odds with the observation that consumers typically do not care very much about a single cent and the predicted outcome clearly goes against the fact that many prices end in 99c. If sellers really charged the price at which they buy or produce a good or a service, we should observe all possible price endings. Basu (2006) argues that the prevalence of 99 cent prices in shops can be explained by rational consumers who disregard the rightmost digits of the price. This "bounded rational" behaviour leads to an Bertrand equilibrium with positive mark-ups allowing firms to make at least small profits.We use data from an Austrian price comparison site, which bears the advantage that in such an environment other factors than price both can be observed online and play a minor role. Price comparison sites are therefore highly suited for our test.We find results highly compatible with Basu's theory. We can show that price points -in particular prices ending in 9 -are more frequent than other endings and have significant impact on consumer demand. This shows that the mechanism that was postulated by Bertrand is not in place. Consumers do not necessarily choose the cheapest price and they even less do so when the Euro digits of the price are the same (i.e. when the difference is small). Moreover, the nine-ending prices are sticky: neither the price-setter itself wants to change them nor the rivals do underbid these prices, if they represent the cheapest price on the market. This might either show that shops seem to believe that it is no use to only slightly undercut a rival's price if this do...

We document a causal impact of online user-generated information on realworld economic outcomes. In particular, we conduct a randomized field experiment to test whether additional content on Wikipedia pages about cities affects tourists' choices of overnight visits. Our treatment of adding information to Wikipedia increases overnight stays in treated cities compared to nontreated cities. The impact is largely driven by improvements to shorter and relatively incomplete pages on Wikipedia. Our findings highlight the value of digital public goods for informing individual choices. | INTRODUCTIONAsymmetric information can hinder efficient economic activity (Akerlof, 1970). In recent decades, the Internet and new media have enabled greater access to information than ever before. However, the digital divide, language barriers, Internet censorship, and technological constraints still create inequalities in the amount of accessible information (see