Frontiers: Digital Hermits

Jeanine Miklós-Thal (), Avi Goldfarb, Avery Haviv () and Catherine Tucker ()
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Jeanine Miklós-Thal: Economics and Management, Simon Business School, University of Rochester, Rochester, New York 14627; Center for Economic Policy Research, London EC1V 0DX, United Kingdom
Avery Haviv: Marketing, Simon Business School, University of Rochester, Rochester, New York 14627
Catherine Tucker: National Bureau of Economic Research, Cambridge, Massachusetts 02138; MIT Sloan School of Management, Cambridge, Massachusetts 02142

Marketing Science, 2024, vol. 43, issue 4, 697-708

Abstract: When users share multidimensional data about themselves with a firm, the firm learns about the correlations between different dimensions of user data. We incorporate this type of learning into a model of a data market in which a firm acquires data from users with privacy concerns. Each user can share no data, only nonsensitive data, or their full data with the firm. As the firm collects more data and becomes better at drawing inferences about a user’s privacy-sensitive data from their nonsensitive data, the share of new users who share no data (“digital hermits”) grows. This growth of digital hermits occurs even though the firm offers higher compensation for a user’s nonsensitive data and a user’s full data as its ability to draw inferences improves. At the same time, the share of new users who share their full data also grows. The model thus predicts a polarization of users’ data-sharing choices away from nonsensitive data sharing to no sharing and full sharing. Our model suggests that recent privacy policies, which are focused on control of data rather than inferences, may be misplaced.

Keywords: privacy; data; digital markets; prediction; game theory; microeconomics (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:43:y:2024:i:4:p:697-708

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