A Theory of Transactions Privacy

Charles Kahn, James McAndrews and William Roberds

Center for Financial Institutions Working Papers from Wharton School Center for Financial Institutions, University of Pennsylvania

Abstract: In this paper, we consider the costs and benefits of transactions privacy. In the environment we consider, privacy is the concealment of potentially useful information, but concealment also potentially bestows benefits. In some versions of the environment, the standard Coasian logic applies: given an unambiguous initial assignment of rights and sufficient flexibility in contracting, efficiency in information revelation with result. Coasian bargaining may be impeded, however, by either an inability to make certain commitments or by the presence of significant investments that must be made before the transaction occurs. In such cases, initial assignments of rights (for example, privacy laws) can have consequences for efficiency.

Date: 2001-03
New Economics Papers: this item is included in nep-mic
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Working Paper: A theory of transactions privacy (2000)
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