Behavioral Advertising: From One-Sided Chicken to Informational Norms

15 Vanderbilt Entertainment and Technology Law Journal, (2012)

Chicago-Kent College of Law Research Paper No. 2012-08

46 Pages Posted: 4 Apr 2012 Last revised: 19 Jun 2014

See all articles by Richard Warner

Richard Warner

Chicago-Kent College of Law

Robert H. Sloan

University of Illinois at Chicago

Date Written: May 18, 2012

Abstract

When you download the free audio recording software from Audacity, you agree that Audacity may collect your information and use it to send you advertising. Billions of such pay-with-data exchanges feed information daily to a massive advertising ecosystem that tailors web site advertising as closely as possible to individual interests. The vast majority want considerably more control over our information. We nonetheless routinely enter pay-with-data exchanges when we visit CNN.com, use Gmail, or visit any of a vast number of other websites. Why? And, what, if anything, should we do about it? We answer both questions by describing pay-with-data exchanges as a game of Chicken that we play over and over with sellers under conditions that guarantee we will always lose. Chicken is traditionally played with cars. Two drivers at opposite ends of a road drive toward each other at high speed. The first to swerve loses. We play a similar game with advertisers — with one crucial difference: we know in advance that the advertisers will never “swerve.”

In classic Chicken with cars, the players’ preferences are mirror images of each other. When Phil and Phoebe face each other in their cars, Phil’s first choice is that Phoebe swerve first. His second choice is that they swerve simultaneously. Mutual cowardice is better than a collision. Unilateral cowardice is too, so third place goes to his swerving before Phoebe does. Collision ranks last. Phoebe’s preferences are the same except that she is in Phil’s place and Phil in hers. Change the preferences a bit, and we have the game we play in pay-with-data exchanges. Phil’s preferences are the same, but Phoebe’s differ. She still prefers that Phil swerve first, but collision is in second place. Given these preferences, Phoebe will never swerve. Phil knows Phoebe has these preferences, so he knows he has only two options: he swerves, and she does not; and, neither swerves. Since he prefers the first, he will swerve. Call this One-Sided Chicken. We play One-Sided Chicken when in our website visits we enter pay-with-data exchanges. We argue that buyers’ preferences parallel Phil’s while the sellers’ parallel “collision second” Phoebe’s. We name the players’ choices in this pay-with-data game “Give In,” (the “swerve” equivalent) and “Demand” (the “don’t swerve” equivalent). For buyers, “Demand” means refusing to use the website unless the seller’s data collection practices conform to the buyer’s informational privacy preferences. “Give in” means permitting the seller to collect and process information in accord with whatever information processing policy it pursues. For sellers, “Demand” means refusing to alter their information processing practices even when they conflict with a buyer’s preferences. “Give in” means conforming information processing to a buyer’s preferences. We contend that sellers’ first preference is to demand while buyers give in and that their second is the collision equivalent in which both sides demand. Such demanding sellers leave buyers only two options: give in and use the site, or demand and do not. Since buyers prefer the first option, they always give in.

It would be better if we were not locked into One-Sided Chicken. Ideally, informational norms should regulate the flow of personal information. Informational norms are norms that constrain the collection, use, and distribution of personal information. We contend that such norms would ensure free and informed consent to businesses’ use of consumer data. Unfortunately, pay-with-data exchanges are one of a number of situations in which rapid advances in information processing technology have outrun the slow evolution of norms. We argue that, in a sufficiently competitive market, the needed norms would arise if we had adequate tracking prevention technologies.

Keywords: privacy, informational privacy, game theory, chicken, law and economics, behavioral advertising, online advertising

JEL Classification: K00, K10

Suggested Citation

Warner, Richard and Sloan, Robert H., Behavioral Advertising: From One-Sided Chicken to Informational Norms (May 18, 2012). 15 Vanderbilt Entertainment and Technology Law Journal, (2012); Chicago-Kent College of Law Research Paper No. 2012-08. Available at SSRN: https://ssrn.com/abstract=2034424 or http://dx.doi.org/10.2139/ssrn.2034424

Richard Warner (Contact Author)

Chicago-Kent College of Law ( email )

565 West Adams St.
Chicago, IL 60661
United States

Robert H. Sloan

University of Illinois at Chicago ( email )

1200 W Harrison St
Chicago, IL 60607
United States

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