15 April 2015

Privacy Economics

'The Economics of Privacy' by Alessandro Acquisti, Curtis R. Taylor and Liad Wagman "summarizes and draws connections among diverse streams of empirical and theoretical research on the economics of privacy".

The authors comment
Our focus is on the economic value and consequences of privacy and of personal information, and on consumers’ understanding of and decisions about the costs and benefits associated with data protection and data sharing. We highlight how the economic analysis of privacy evolved through the decades, as, together with progress in information technology, more nuanced issues associated with the protection and sharing of personal information arose. We use three themes to connect insights from the literature. First, there are theoretical and empirical situations where the protection of privacy can both enhance and detract from economic surplus and allocative efficiency. Second, consumers’ ability to make informed decisions about their privacy is severely hindered, because most of the time they are in a position of imperfect information regarding when their data is collected, with what purposes, and with what consequences. Third, specific heuristics can profoundly influence privacy decision-making. We conclude by highlighting some of the ongoing issues in the privacy debate.