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Economics of Privacy

Kai-Lung Hui
National University of Singapore (NUS) - School of Computing

Ivan P. L. Png
National University of Singapore

HANDBOOK OF INFORMATION SYSTEMS AND ECONOMICS, Terry Hendershott, ed., Elsevier, June 2005

Abstract:
This chapter reviews economic analyses of privacy. We begin by scrutinizing the "free market" critique of privacy regulation. Welfare may be non-monotone in the quantity of information, hence there may be excessive incentive to collect information. This result applies to both non-productive and productive information. Over-investment is exacerbated to the extent that personal information is exploited across markets. Further, the "free market" critique does not apply to overt and covert collection of information that directly causes harm. We then review research on property rights and challenges in determining their optimal allocation. We conclude with insights from recent empirical research and directions for future research.

Keywords: Privacy

JEL Classifications: D11, D18, D60, D82

Accepted Paper Series

Date posted: August 23, 2005 ; Last revised: September 02, 2005

Suggested Citation

Hui, Kai-Lung and Png, Ivan P. L., Economics of Privacy. HANDBOOK OF INFORMATION SYSTEMS AND ECONOMICS, Terry Hendershott, ed., Elsevier, June 2005. Available at SSRN: http://ssrn.com/abstract=786846

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Contact Information

Kai-Lung Hui (Contact Author) National University of Singapore (NUS) - School of Computing ( email ) Department of Information Systems 3 Science Drive 2 Singapore 117543+65 874 4483 (Phone) +65 779 4580 (Fax)
Ivan P.L. Png National University of Singapore ( email ) Singapore 117543 Singapore +65 6516-6807 (Phone) HOME PAGE: http://www.comp.nus.edu.sg/~ipng/