Privacy and Deviation

Journal of Economic Literature, 2016

This article summarizes and draws connections among diverse streams of theoretical and empirical research on the economics of privacy. We focus on the economic value and consequences of protecting and disclosing personal information, and on consumers' understanding and decisions regarding the trade-offs associated with the privacy and the sharing of personal data. We highlight how the economic analysis of privacy evolved over time, as advancements in information technology raised increasingly nuanced and complex issues. We find and highlight three themes that connect diverse insights from the literature. First, characterizing a single unifying economic theory of privacy is hard, because privacy issues of economic relevance arise in widely diverse contexts. Second, there are theoretical and empirical situations where the protection of privacy can both enhance and detract from individual and societal welfare. Third, in digital economies, consumers' ability to make informed decisions about their privacy is severely hindered because consumers are often in a position of imperfect or asymmetric information regarding when their data is collected, for what purposes, and with what consequences. We conclude the article by highlighting some of the ongoing issues in the privacy debate of interest to economists.

2009

Abstract We investigate individual privacy valuations in a series of experiments informed by theories from behavioral economics and decision research. We find evidence of order and endowment effects and nonnormal distributions of valuations.

2009

Privacy is a complex decision problem resulting in opinions, attitudes, and behaviors that differ substantially from one individual to another [1]. Subjective perceptions of threats and potential damages, psychological needs, and actual personal economic returns all play a role in affecting our decisions to protect or to share personal information. Thus, inconsistencies or even

Digital Policy, Regulation and Governance, 2017

Purpose: The viability of online anonymity is questioned in today’s online environment where many technologies enable tracking and identification of individuals. By highlighting the shortcomings of government, industry and consumers in protecting anonymity, it is clear that a new perspective for ensuring anonymity is needed. Where current stakeholders have failed to protect anonymity, some proponents argue economic models exist for valuation of anonymity. By placing monetary value on anonymity through Rawls’ concept of primary goods, it is possible to create a marketplace for anonymity, therefore allowing users full control of how their personal data is used. Such a marketplace offers users the possibility to engage with companies and other entities to sell and auction personal data. Importantly, participation in a marketplace does not sacrifice one’s anonymity since there are different levels of anonymity in online systems. Design/methodology/approach: The paper utilizes a conceptual framework based on the abstractions of anonymity and data valuation. Findings: The manuscript constructs a conceptual foundation for exploring the development and deployment of a personal data marketplace. By suggesting features allowing individuals’ control of their personal data, and properly establishing monetary valuation of one’s personal data, it is argued that individuals will take a more proactive management of personal data. Research limitations/implications: Because the paper is conceptual in nature, it would be beneficial to explore the feasibility of establishing a personal data marketplace. Originality/value: An overview of available services and products offering increased anonymity is explored, in turn, illustrating the beginnings of a market response for anonymity as a valuable good. By placing monetary value on individuals’ anonymity, it is reasoned that individuals will more consciously protect their anonymity in ways where legislation and other practices (i.e., privacy policies, marketing opt-out) have failed.

In many types of information systems, users face an implicit tradeoff between disclosing personal information and receiving benefits, such as discounts by an electronic commerce service that requires users to divulge some personal information. While these benefits are relatively measurable, the value of privacy involved in disclosing the information is much less tangible, making it hard to design and evaluate information systems that manage personal information. Meanwhile, existing methods to assess and measure the value of privacy, such as self-reported questionnaires, are notoriously unrelated of real eworld behavior. To overcome this obstacle, we propose a methodology called VOPE (Value of Privacy Estimator), which relies on behavioral economics' Prospect Theory (Kahneman & Tversky, 1979) and valuates people's privacy preferences in information disclosure scenarios. VOPE is based on an iterative and responsive methodology in which users take or leave a transaction that includes a component of information disclosure. To evaluate the method, we conduct an empirical experiment (n ¼ 195), estimating people's privacy valuations in electronic commerce transactions. We report on the convergence of estimations and validate our results by comparing the values to theoretical projections of existing results (Tsai, Egelman, Cranor, & Acquisti, 2011), and to another independent experiment that required participants to rank the sensitivity of information disclosure transactions. Finally, we discuss how information systems designers and regulators can use VOPE to create and to oversee systems that balance privacy and utility.

The importance of personal privacy to Internet users has been extensively researched using a variety of survey techniques. The limitations of survey research are well-known and exist in part because there are no positive or negative consequences to responses provided by survey participants. Experimental economics is widely accepted by economists and others as an investigative technique that can provide measures of economic choice-making that are substantially more accurate than those provided by surveys. This paper describes our preliminary efforts at applying the techniques of experimental economics to provide a foundation for estimating the values that consumers place on privacy and various forms of security, such as encryption and HIPAA. In the activities described, experiment participants are graduate and undergraduate students currently seeking jobs. Preliminary results from two pilot experiments suggest that a complete set of experimental measures of choice-making will provide...

Proceedings of the 5th conference on Innovations in theoretical computer science - ITCS '14, 2014

We prove new positive and negative results concerning the existence of truthful and individually rational mechanisms for purchasing private data from individuals with unbounded and sensitive privacy preferences. We strengthen the impossibility results of Ghosh and Roth (EC 2011) by extending it to a much wider class of privacy valuations. In particular, these include privacy valuations that are based on (ε, δ)-differentially private mechanisms for non-zero δ, ones where the privacy costs are measured in a per-database manner (rather than taking the worst case), and ones that do not depend on the payments made to players (which might not be observable to an adversary).

ArXiv, 2017

A personal data market is a platform including three participants: data owners (individuals), data buyers and market maker. Data owners who provide personal data are compensated according to their privacy loss. Data buyers can submit a query and pay for the result according to their desired accuracy. Market maker coordinates between data owner and buyer. This framework has been previously studied based on differential privacy. However, the previous study assumes data owners can accept any level of privacy loss and data buyers can conduct the transaction without regard to the financial budget. In this paper, we propose a practical personal data trading framework that is able to strike a balance between money and privacy. In order to gain insights on user preferences, we first conducted an online survey on human attitude to- ward privacy and interest in personal data trading. Second, we identify the 5 key principles of personal data market, which is important for designing a reasonabl...

Kennedy School of Government, …, 2005

The importance of personal privacy to Internet users has been extensively researched using a variety of survey techniques. The limitations of survey research are well-known and exist in part because there are no positive or negative consequences to responses provided by survey participants. Experimental economics is widely accepted by economists and others as an investigative technique that can provide measures of economic choice-making that are substantially more accurate than those provided by surveys. This paper describes our preliminary efforts at applying the techniques of experimental economics to provide a foundation for estimating the values that consumers place on privacy and various forms of security, such as encryption and HIPAA. In the activities described, experiment participants are graduate and undergraduate students currently seeking jobs. Preliminary results from two pilot experiments suggest that a complete set of experimental measures of choice-making will provide valuable quantification of behavior in Internet privacy/security space. These results also show that online job seekers place great value on security measures, both legislative and technical, that make identity theft much less likely.

2004

We examine the problem of determining a user's value for his/her private information. Web businesses often offer rewards, such as discounts, free downloads and website personalization in exchange for information about the user, such as name, phone number and e-mail address. We present a technique that helps the user determine whether such an offer is acceptable by computing its value in terms of the consequences that could occur as a result of such an information exchange. Bayesian networks are used to model dependencies in the user's utilities for such consequences, and utility elicitation is used to reduce the uncertainty of these utilities. We also derive a "bother cost", which is used by the elicitation engine to determine the optimal time to stop the question process. A simple example experiment demonstrates the effectiveness of the technique by significantly improving the user's expected utility in a simple privacy negotiation.

The Economics of Privacy, 2024

By several accounts, the economics of privacy has grown into a remarkably successful field of research. As the means of collecting and using individuals’ data have expanded, so has the body of work investigating trade-offs associated with those data flows. The number of scholars working in the area has grown, much like the breadth of topics investigated. References to the economic value of personal data have become common in policy and regulation, and so have mentions of economic dimensions of privacy problems. Thinly veiled underneath those successes, however, lies a less encouraging trend. In this manuscript, I argue that the very success of the economics of privacy has laid the foundation for a potentially adverse effect on the public debate around privacy. Economic arguments have become central to the debate around privacy. When used as complements to considerations less amenable to economic quantification, those arguments are valuable tools: they capture a portion of the multiform implications of evolving privacy boundaries. When, instead, economic arguments crowd out those other noneconomic considerations from the public discourse around privacy, problematic scenarios arise. In one scenario, the economic analysis of privacy will keep growing in influence, but its overly narrow conception of privacy will impoverish rather than augment the depth of the debate around privacy. In a second scenario, less likely but equally problematic, the economics of privacy will progressively undermine its own relevance by failing to account for the complexity and nuance of modern privacy problems. There is a third scenario—one this manuscript explores. The economics of privacy may expand its horizons and relevance both by considering economic dimensions and research questions that have so far received limited attention, and by accounting for the broader scholarship on privacy coming from other disciplines. As a complement to the contributions of other fields, rather than a substitute for them, the economics of privacy may keep thriving and remain a useful tool for debate and policymaking.

Proceedings of the 16th International Conference on Database Theory - ICDT '13, 2013

Personal data has value to both its owner and to institutions who would like to analyze it. Privacy mechanisms protect the owner's data while releasing to analysts noisy versions of aggregate query results. But such strict protections of individual's data have not yet found wide use in practice. Instead, Internet companies, for example, commonly provide free services in return for valuable sensitive information from users, which they exploit and sometimes sell to third parties.

2010

In modern information economies, the reduction of the cost of storing information has made it possible to capture, save, and analyze increasing amounts of information about the individual. Companies record details of each customer transaction. Websites log their visitors' behavior. Data aggregators link information coming from different sources to compose individual profiles.

CHI '13 Extended Abstracts on Human Factors in Computing Systems, 2013

Even though users have become increasingly concerned about their privacy online, they continue to disclose deeply personal information in a number of online venues, including e-commerce portals and social networking sites. Scholars have tried to explain this inconsistency between attitudes and behavior by suggesting that online users consciously weigh the trade-off between the costs and benefits of online information disclosure. We argue that online user behaviors are not always rational, but may occur due to expedient decision-making in the heat of the moment. Such decisions are based on cognitive heuristics (i.e., rules of thumb) rather than on a careful analysis of each transaction. Based on this premise, we seek to identify the specific triggers for disclosure of private information online. In the experiment reported here, we explore the operation of two specific heuristics-benefit and fuzzy boundary-in influencing privacy-related attitudes and behaviors. Theoretical and design implications are discussed.

2004

In this paper we create an experimental 'information market' where consumers can trade in potentially useful personal information. We study how a market where trade in information takes place compares experimentally with a market where there is no trade in information. We test the impact of trading in information and the impact of stricter privacy laws on consumers and sellers, and also the impact from a social perspective. Total surplus was found to be significantly higher in a higher privacy regime than in a lower privacy regime. Although our theoretical predictions showed that sellers would be better off in a higher privacy regime, the results from the experiment did not support it significantly. Consumers were found to be better off in the higher privacy regime although, the theoretical results made no such predictions. There was partial support for the efficiency being higher in a higher privacy regime.