Disclosure of Personal Information Under Risk of Privacy Shocks

Abstract:     
Individuals disclose an increasing amount of personal information when buying goods or services. Personal details are revealed despite the rising threat of privacy breaches at firms that collect the information. Yet, we know surprisingly little about the trade-offs individuals consider when disclosing personal information in economic transactions. We present this problem as a dynamic lottery with personal information under the risk of privacy shocks. Subjects in the experiment receive private information on whether they are a good or bad type. We explore how the notification about a privacy breach changes an individual's behavior with regard to disclosing such information. This paper describes our experimental design as well as preliminary theoretical predictions.

Keywords: Privacy, information sharing, data protection

JEL Classification: D43, L14, O30

working papers series