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Privacy, property rights and efficiency: The economics of privacy as secrecy

Privacy, property rights and efficiency: The economics of privacy as secrecy,10.1007/s11129-005-9004-7,Qme-quantitative Marketing and Economics,Benjam

Privacy, property rights and efficiency: The economics of privacy as secrecy   (Citations: 27)
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There is a long history of governmental efforts to protect personal privacy and strong debates about the merits of such policies. A central element of privacy is the ability to control the dissemination of personally identifiable data to private parties. Posner, Stigler, and others have argued that privacy comes at the expense of allocative efficiency. Others have argued that privacy issues are readily resolved by proper allocation of property rights to control information. Our principal findings challenge both views. We find: (a) privacy can be efficient even when there is no “taste” for privacy per se, and (b) to be effective, a privacy policy may need to ban information transmission or use rather than simply assign individuals control rights to their personally identifiable data.
Journal: Qme-quantitative Marketing and Economics - QME-QUANT MARK ECON , vol. 4, no. 3, pp. 209-239, 2006
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    • ...Finally, a paper closely related is Hermalin and Katz (2006)...

    Stefan Bechtoldet al. An Economic Analysis of Trade-Secret Protection in Buyer-Seller Relati...

    • ...Hermalin and Katz [15] showed that an increase in the quantity of personal information might reduce welfare, and therefore protecting privacy might raise welfare...

    M. Tolga Akçuraet al. Privacy, Customization, and Cross-Selling of Information

    • ...Finally, a paper closely related is Hermalin and Katz (2006)...

    Stefan Bechtoldet al. An Economic Analysis of Trade-Secret Protection in Buyer-Seller Relati...

    • ...Hermalin and Katz (2004) suggest that individuals might voluntarily reveal their personal information to trading partners anyway...
    • ...First, the Chicago School focuses on ex post efficiency, but overlooks that open and perfect information may destroy the basis for some markets with risk and asymmetric information (Hermalin and Katz, 2004)...
    • ...However, welfare may not be monotone in the quantity of personal information (Hermalin and Katz, 2004)...
    • ...In the following review, we adopt the classification of Hermalin and Katz (2004) and distinguish two classes of situation where privacy might matter...
    • ...Hermalin and Katz (2004) provide the simplest model of the issue...
    • ...12 Hermalin and Katz (2004) also make this point in discussing property rights...
    • ...Hermalin and Katz (2004) provide a simple model of the issue...
    • ...The analyses of Hermalin and Katz (2004) and Taylor (2005) imply that there is no simple rule: whether privacy of personal information raises or reduces welfare depends on the circumstances...
    • ...Hermalin and Katz (2004) show that the market outcome is identical regardless of how property rights over personal information are assigned...
    • ...However, the analyses of Hermalin and Katz (2004) and Kahn et al. (2000) apply to situations where the collection and use of personal information take place within the same (primary) market...
    • ...For instance, if disclosure of AIDS test results were mandatory, individuals might forgo testing, which would lead to unintended adverse consequences (Hermalin and Katz, 2004)...

    Kai-Lung Huiet al. The Economics of Privacy

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