TY - UNPB
T1 - An informational theory of privacy
AU - Schottmuller, C.
AU - Jann, Ole
PY - 2016/10/11
Y1 - 2016/10/11
N2 - We develop a theory that explains how and when privacy can increase welfare. Without privacy, some individuals misrepresent their preferences, because they will otherwise be statistically discriminated against. This "chilling effect" hurts them individually, and impairs information aggregation. The information gain from infringing privacy (e.g. by electronic surveillance) can be much smaller than expected ceteris paribus. Overall, privacy is essential for any mechanism of information aggregation, such as markets or a democratic society. It is also redistributive: Like free speech, privacy benefits some and hurts others.
AB - We develop a theory that explains how and when privacy can increase welfare. Without privacy, some individuals misrepresent their preferences, because they will otherwise be statistically discriminated against. This "chilling effect" hurts them individually, and impairs information aggregation. The information gain from infringing privacy (e.g. by electronic surveillance) can be much smaller than expected ceteris paribus. Overall, privacy is essential for any mechanism of information aggregation, such as markets or a democratic society. It is also redistributive: Like free speech, privacy benefits some and hurts others.
KW - privacy
KW - asymmetric information
KW - information aggregation
KW - law and economics
U2 - 10.2139/ssrn.2853468
DO - 10.2139/ssrn.2853468
M3 - Discussion paper
T3 - TILEC Discussion Paper
BT - An informational theory of privacy
ER -