Using Machine Learning to Address Customer Privacy Concerns: An Application with Click-stream Data

22 Pages Posted: 1 Feb 2019

See all articles by Hyesung Yoo

Hyesung Yoo

University of Minnesota - Twin Cities, Carlson School of Management

Song Yao

Washington University in St. Louis - John M. Olin Business School

Luping Sun

Central University of Finance and Economics (CUFE) - Business School

Xiaomeng Du

Baifendian Information Technology Co., Ltd.

Date Written: January 21, 2019

Abstract

The ever-increasing volume of consumer data provide unprecedented opportunities for firms to predict consumer behavior, target customers, and provide customized service. Recent trends of more restrictive privacy regulations worldwide, however, present great challenges for firms whose business activities rely on consumer data. We address these challenges by applying the recently developed federated learning approach --- a privacy-preserving machine learning approach that uses a parallelized learning algorithm to train a model locally on each individual user's device. We apply this approach to data from an online retailer and train a Gated Recurrent Unit recurrent neural network to predict each consumer's click-stream. We show the firm can predict each consumer's activities with a high level of accuracy without the need to store, access, or analyze consumer data in a centralized location, thereby protecting their sensitive information.

Keywords: Privacy, Machine Learning, Federated Learning, Gated Recurrent Unit, Click-Stream Data

Suggested Citation

Yoo, Hyesung and Yao, Song and Sun, Luping and Du, Xiaomeng, Using Machine Learning to Address Customer Privacy Concerns: An Application with Click-stream Data (January 21, 2019). Available at SSRN: https://ssrn.com/abstract=3314787 or http://dx.doi.org/10.2139/ssrn.3314787

Hyesung Yoo

University of Minnesota - Twin Cities, Carlson School of Management ( email )

Minneapolis, MN
United States

Song Yao (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

HOME PAGE: http://www.songyao.org

Luping Sun

Central University of Finance and Economics (CUFE) - Business School ( email )

Beijing
China

Xiaomeng Du

Baifendian Information Technology Co., Ltd. ( email )

China

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