Privacy and the market for private data: A negotiation model to capitalize on private data

The market for consumer information is already a lively market, where consumer information and consumer profile data are often among the most valuable assets owned by online retailers. The value of such commodity derives from the ability of firms to identify consumers and charge them personalized prices flj. We argue that if consumers´ identity and personal information is such a valuable asset, should not consumers benefit from their asset as well? In this paper, we propose a negotiation process between an online consumer agent and an online seller. The online consumer agent acts on behalf of consumers to maximize their social welfare. In our model, the agent derives a quantified privacy risk for each private data and uses it to determine a cost premium value to make the bargaining process manageable. We also provide a computational example to evaluate the model.