Tearing the Veil of Privacy Law: An Experiment on Chilling Effects and the Right to Be Forgotten

Date: 2013-08
By: Yoan Hermstrüwer (Max Planck Institute for Research on Collective Goods, Bonn)
Stephan Dickert (Vienna University of Economics and Business, Institute for Marketing and Consumer Research)
URL: http://d.repec.org/n?u=RePEc:mpg:wpaper:2013_15&r=net
Privacy law relies on the argument that consent does not entail any relevant impediments for the liberty of the consenting individual. Challenging this argument, we experimentally investigate whether consent to the publication of personal information in cyberspace entails self-coercion on a social norm level. Our results suggest that the monetary benefits from consent constitute a price that people are willing to accept for increased compliance with social norms. Providing people with a prior consent option is sufficient to generate chilling effects (i.e., a reduction of norm-deviant behavior). However, nudging people towards potential publicity does not increase the value they place on privacy. We also test how the default design of the right to deletion of personal information (right to be forgotten) affects chilling effects and privacy valuations. Surprisingly, the right to be forgotten does not reduce chilling effects. Moreover, individuals tend to stick with the status quo of permanent information storage.
Keywords: Social Norms, Nudges, Behavioral Law and Economics of Privacy, Consent, Right to Be Forgotten, Dictator Games
JEL: C93

Individual Learning and Cooperation in Noisy Repeated Games

Date: 2013-07-06
By: Yuichi Yamamoto (Department of Economics, University of Pennsylvania)
URL: http://d.repec.org/n?u=RePEc:pen:papers:13-038&r=net
We investigate whether two players in a long-run relationship can maintain cooperation when the details of the underlying game are unknown. Specifically, we consider a new class of repeated games with private monitoring, where an unobservable state of the world influences the payoff functions and/or the monitoring structure. Each player privately learns the state over time but cannot observe what the opponent learned. We show that there are robust equilibria in which players eventually obtain payoffs as if the true state were common knowledge and players played a “belief-free” equilibrium. We also provide explicit equilibrium constructions in various economic examples
Keywords: repeated game, private monitoring, incomplete information, belief-free equilibrium, ex-post equilibrium, individual learning
JEL: C72

Behavioral Approach to Repeated Games with Private Monitoring

Date: 2013-03
By: Hitoshi Matsushima (The University of Tokyo)
Tomomi Tanaka (Economic Development & Global Education, LLC)
Tomohisa Toyama (Kogakuin University)
URL: http://d.repec.org/n?u=RePEc:cfi:fseres:cf309&r=net
We examine repeated prisoners’ dilemma with imperfect private monitoring and random termination where the termination probability is low. We run laboratory experiments and show subjects retaliate more severely when monitoring is more accurate. This experimental result contradicts the prediction of standard game theory. Instead of assuming full rationality and pure self-interest, we introduce naivete and social preferences, i.e., reciprocal concerns, and develop a model that is consistent with, and uniquely predicts, the observed behavior in the experiments. Our behavioral model suggests there is a trade-off between naivete and reciprocity. When people are concerned about reciprocity, they tend to make fewer random choices.