Phenomenal paper by @DrDaronAcemoglu et al.
It responds to “but people don’t care about privacy”, “I have nothing to hide”, “it’s all about revealed preferences”, “we get a barter, it’s all good”. Too fast.
There is in fact a massive negative externality. Here’s how it goes 1/
It responds to “but people don’t care about privacy”, “I have nothing to hide”, “it’s all about revealed preferences”, “we get a barter, it’s all good”. Too fast.
There is in fact a massive negative externality. Here’s how it goes 1/
With fully rational consumers (a big if), individuals who don’t care about privacy release their data. This compromises those who do care and whose information is correlated. (Cambridge Analytica scandal:data shared by 1/4m FB users but allowed to infer info about 50m users!). 2/
A data market? Once information leaks, less incentive to protect privacy. And less to gain from giving data away, as the platform already knows about you: market price of data is low. This gives the “impression” that users do not value privacy, but it’s due to externality. 3/
