Privacy Preserving Social Norm Nudges

Abstract

Nudges comprise a key component of the regulatory toolbox. Both the public and private sectors use nudges extensively in various domains, ranging from environmental regulation to health, food and financial regulation. This article focuses on a particular type of nudge: social norm nudges. It discusses, for the first time, the privacy risks of such nudges. Social norm nudges induce behavioral change by capitalizing on people’s desire to fit in with others, on their predisposition to social conformity, and on their susceptibility to the way information is framed. In order to design effective social norm nudges, personal information about individuals and their behavior must be collected, processed and later be disseminated (usually in some aggregated form). Thus, the use of social norm nudges opens up the possibility for privacy threats. Despite the significant privacy concerns raised by social norm nudges, research on the topic has been scarce. This article makes two contributions to the understanding of the privacy risks underlying the use of social norm nudges. The first contribution is analytic: it demonstrates that using social norm nudges can pose a threat to individuals’ privacy through re-identification of anonymized data. This risk was demonstrated in other contexts (e.g. Netflix recommendation contest). The second contribution is policy oriented: it argues that the strategy of differential privacy can be used to mitigate these privacy risks and offer a way to employ social norms nudges while protecting individuals’ privacy.

Keywords: social norm nudges, differential privacy, environmental regulation

JEL Classification: K32