A Theory of Transactions Privacy

FRB Atlanta Working Paper No. 2000-22

29 Pages Posted: 19 Jan 2001

See all articles by Charles M. Kahn

Charles M. Kahn

University of Illinois, Urbana-Champaign; Bank of Canada; Federal Reserve Bank of Saint Louis

James McAndrews

Wharton Financial Institutions Center

William Roberds

Federal Reserve Bank of Atlanta

Multiple version iconThere are 2 versions of this paper

Date Written: November 2000

Abstract

In this paper, we consider the costs and benefits of transactions privacy. In the environment we consider, privacy is the concealment of potentially useful information, but concealment also potentially bestows benefits. In some versions of the environment, the standard Coasian logic applies: given an unambiguous initial assignment of rights and sufficient flexibility in contracting, efficiency in information revelation will result. Coasian bargaining may be impeded, however, by either an inability to make certain commitments or by the presence of significant investments that must be made before the transaction occurs. In such cases, initial assignments of rights (for example, privacy laws) can have consequences for efficiency.

Keywords: Privacy, transactions, Internet, e-money

JEL Classification: D80, G28

Suggested Citation

Kahn, Charles M. and McAndrews, James and Roberds, William, A Theory of Transactions Privacy (November 2000). FRB Atlanta Working Paper No. 2000-22, Available at SSRN: https://ssrn.com/abstract=252760 or http://dx.doi.org/10.2139/ssrn.252760

Charles M. Kahn

University of Illinois, Urbana-Champaign ( email )

Department of Finance
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HOME PAGE: http://kahnfrance.com/cmk/

Bank of Canada

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James McAndrews

Wharton Financial Institutions Center ( email )

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William Roberds (Contact Author)

Federal Reserve Bank of Atlanta ( email )

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