Privacy, Trust and Social Network Formation
50 Pages Posted: 2 Dec 2015
Date Written: December 1, 2015
We study in the laboratory the impact of private information revelation on the selection of partners when forming individual networks. Our experiment combines a “network game” and a “public-good game”. In the network game, individuals decide with whom to form a link with, while in the public-good game they decide whether or not to contribute. The variations in our treatments allow us to identify the effect of revealing one’s name on the probability of link formation. Our main result suggests that privacy mechanisms affect partner selection and the consequent structure of the network: when individuals reveal their real name, their individual networks are smaller but their profits are higher. This indicates that the privacy costs of revealing personal information are compensated by more productive links.
Keywords: privacy, social networks, public goods, trust
JEL Classification: D12, D85
Suggested Citation: Suggested Citation