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IRVINE, Calif.—David Norris wants to collect the digital equivalent of fingerprints from every computer, cellphone and TV set-top box in the world.
Advertisers no longer want to just buy ads. They want to buy access to specific people. So, Mr. Norris is building a "credit bureau for devices" in which every computer or cellphone will have a "reputation" based on its user's online behavior, shopping habits and demographics. He plans to sell this information to advertisers willing to pay top dollar for granular data about people's interests and activities.
It might seem that one computer is pretty much like any other. Far from it: Each has a different clock setting, different fonts, different software and many other characteristics that make it unique. Every time a typical computer goes online, it broadcasts hundreds of such details as a calling card to other computers it communicates with. Tracking companies can use this data to uniquely identify computers, cellphones and other devices, and then build profiles of the people who use them.
Tracking companies are now embracing fingerprinting partly because it is much tougher to block than other common tools used to monitor people online, such as browser "cookies," tiny text files on a computer that can be deleted.
BlueCava says the information it collects about devices can't be traced back to individuals and that it will offer people a way to opt out of being tracked. Still, Mr. Norris says it's tough to figure out how to alert people their devices are being fingerprinted. "We don't have all the answers, but we're just going to try to be really clear" about how the data is used, he says.
An analytical framework is developed to investigate the competitive implications of Personalized Pricing (PP), whereby firms charge different prices to different consumers, based on their willingness to pay. Personalized pricing is embedded in a model of vertical product differentiation, and show how it affects firms' choices over quality. The authors show that firms' optimal pricing strategies with PP may be non-monotonic in consumer valuations.