Privacy Costs and Personal Data Protection: Economic and Legal Perspectives
RAND Corporation; Carnegie Mellon University - Heinz College of Information Systems and Public Policy
Carnegie Mellon University - Heinz College
December 12, 2009
Berkeley Technology Law Journal, Vol. 24, No. 3, 2009
We analyze personal data protection laws in the United States through the lenses of the economic theories of ex ante safety regulation, ex post liability and information disclosure. Specifically, we consider and contrast how legal and economic theories interpret privacy costs and the remedies to those costs. First, we introduce the general economic theories of ex ante regulation, ex post liability and information disclosure. Then, we present their causal relationships and show how they attempt to reduce possible privacy harms caused by a firm’s activity. We then scrutinize their impact by contrasting legal and economic doctrines. Finally, we provide deeper economic analysis of the three legal mechanisms and highlight conditions under which they may become socially inefficient.
Number of Pages in PDF File: 41
Keywords: information disclosure, security breach notification, data breaches, identity theft, privacy costs, ex ante safety regulation, ex post liability
JEL Classification: D18, K13, K20, L51, L86
Date posted: December 13, 2009 ; Last revised: April 13, 2010
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