A Theory of Transactions Privacy

FRB Atlanta Working Paper No. 2000-22

29 Pages Posted: 19 Jan 2001  

Charles M. Kahn

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

James McAndrews

Federal Reserve Bank of New York

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
340 Wohlers Hall
Champaign, IL 61820
United States

HOME PAGE: http://kahnfrance.com/cmk/

Feseral Reserve Bank of Saint Louis

411 Locust St
Saint Louis, MO 63011
United States

Bank of Canada

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

James McAndrews

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-5063 (Phone)
212-720-8353 (Fax)

William Roberds (Contact Author)

Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States
404-498-8970 (Phone)
404-498-8956 (Fax)

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