Valuating Privacy

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Abstract
In several experimental auctions, participants put a dollar value on private information before revealing it to a group. An analysis of results show that a trait's desirability in relation to the group played a key role in the amount people demanded to publicize private information. Because people can easily obtain, aggregate, and disperse personal data electronically, privacy is a central concern in the information age. This concern is clear in relation to financial data and genetic information, both of which can lead to identity abuse and discrimination. However, other relatively harmless information can also be abused, including a person's gender, salary, age, marital status, or shopping preferences. What's unclear is whether it's the fear of such abuse that actually causes people's stated hesitance to reveal their data. Our hypothesis - and the motivation for our study - is that people reveal information when they feel that they're somewhat typical or positively atypical compared to the target group. To test this hypothesis, we conducted experiments that elicit the value people place on their private data. We found, with great significance (more than 95 percent statistical confidence) that a linear relationship exists between an individual's belief about a trait and the value he or she places on it. That is, the less desirable the trait, the greater the price a person demands for releasing the information. Furthermore, we found that small deviations in a socially positive direction are associated with a lower asking price.

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