Tony Vila
ABSTRACT
Consumers want to interact with web sites, but they also want to keep control of their private information. Asymmetric information about whether web sites will sell private information or not leads to a lemons market for privacy. We discuss privacy policies as signals in a lemons market and ways in which current realizations of privacy policies may fail to be effective signals. As a result of these shortcomings, we consider a "lemons market with testing," where consumers have a cost of determining whether a site meets their privacy requirement. Our model explains empirical data concerning privacy policies and privacy seals. We end by discussing cyclic instability in the number of web sites that sell consumer information.
- Alessandro Acquisti. Protecting privacy with economics: Economic incentives for preventive technologies in ubiquitous computing environments. In Workshop on Socially-informed Design of Privacy-enhancing Solutions, 4th International Conference on Ubiquitous Computing (UBICOMP 02), September 2002. http://guir.berkeley.edu/privacyworkshop2002/papers/acquisti-ubicomp-09%-19-02.pdf.Google Scholar
- George A. Akerlof. The market for lemons: Quality uncertainty and the market mechanism. Quarterly Journal of Economics, pages 488--500, August 1970.Google ScholarCross Ref
- AT&T. P3p privacy bird. http://www.privacybird.com.Google Scholar
- A. N. Burnetas and M. N. Katehakis. Asymptotic bayes analysis for the finite horizon one armed bandit problem. Probability in the Engineering and Informational Sciences, 2002. to appear. Google ScholarDigital Library
- Giacomo Calzolari and Alessandro Pavan. Optimal design of privacy policies. http://faculty.nwu.edu/faculty/pava/ODPP.pdf.Google Scholar
- Federal Trade Commission. Privacy online: Fair information practices in the electronic marketplace. http://www.ftc.gov/reports/privacy2000/privacy2000.pdf, 2000.Google Scholar
- EPIC. Pretty poor privacy. http://www.epic.org, 1999.Google Scholar
- Center for Democracy and Technology. Surveys main page. http://www.cdt.org/privacy/guide/introduction/surveyinfo.html, 2002.Google Scholar
- Heather Green, Mike France, Marcia Stepanek, and Amy Borrus. Our four-point plan. Business Week Online, March 2000.Google Scholar
- William F. Adkinson Jr, Jeffrey A. Eisenach, and Thomas M. Lenard. Privacy online: A report on the information practices and policies of commercial web sites. http://www.pff.org/publications/privacyonlinefinalael.pdf, 2002.Google Scholar
- Brian McWilliams. Real networks hit with privacy lawsuit. http://www.internetnews.com/bus-news/article.php/8161\_235141.Google Scholar
- Dierdre Mulligan, Ann Cavoukian, Ari Schwartz, and Michael Gurski. P3p and privacy: An update for the privacy community. http://www.cdt.org/privacy/pet/p3pprivacy/shtml, 2000.Google Scholar
- Paul Resnick, Richard Zeckhauser, John Swanson, and Kate Lockwood. The value of reputation on ebay: A controlled experiment. http://www.si.umich.edu/~presnick/papers/postcards/, 2002.Google Scholar
- Michael Spence. Job market signalling. The Quarterly Journal of Economics, pages 355--74, 1973.Google ScholarCross Ref
- TrustE. Truste statistics. http://www.truste.org/bus/pub\_bottom.html, 2003.Google Scholar
- Hal Varian. Economic aspects of personal privacy. http://www.sims.berkeley.edu/~hal/Papers/privacy/, 1996.Google Scholar
- Toshio Yamagichi and Masafumi Matsuda. Improving the lemons market with a reputation system. Technical report, University of Hokkaido, 2002.Google Scholar
- Why we can't be bothered to read privacy policies models of privacy economics as a lemons market
Recommendations
Competing with Privacy
We analyze the implications of consumer privacy for competition in the marketplace. Firms compete for consumer information and derive revenues both from consumer purchases as well as from disclosing consumer information in a secondary market. Consumers ...
Coupon Targeting Competition in Privacy Sensitive Market
2018 56th Annual Allerton Conference on Communication, Control, and Computing (Allerton)The problem of coupon targeting competition between two retailers who sell the same product in a privacy sensitive market is considered. In particular, consumers purchasing decisions are influenced by product prices as well as prior privacy violations by ...
Price versus privacy: an experiment into the competitive advantage of collecting less personal information
In previous privacy studies, consumers have reported their unease with online retailers that collect a lot of personal data. Consumers claim they will switch to alternative providers or cancel transactions if data collection is deemed excessive. ...
Comments