``I don't care about cookies!" Platform Data Disclosure and Time-Inconsistent Users

Abstract

Time-inconsistent internet users neglect future privacy costs and release too much data to be monetized by digital platforms. We study how regulations that require user consent for data processing affect platform profits, welfare and user surplus, depending on business models and the degree of time inconsistency. Consent mechanisms increase user surplus or welfare only if their design facilitates consent refusal. If platforms can make it difficult to opt out, it may be better for society as a whole if the former choose the disclosure level, even though it tends to be excessive from a user point of view. Voluntary caps on usage, as recently adopted by some platforms, can raise profits by making some users consent to more disclosure.