Public Goods, Social Pressure, and the Choice Between Privacy and Publicity | Zendy

Andrew F. Daughety | Zendy; Jennifer F. Reinganum | Zendy

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Public Goods, Social Pressure, and the Choice Between Privacy and Publicity

Author(s) -

Andrew F. Daughety,

Jennifer F. Reinganum

Publication year - 2010

Publication title -

american economic journal microeconomics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 5.339

H-Index - 40

eISSN - 1945-7685

pISSN - 1945-7669

DOI - 10.1257/mic.2.2.191

Subject(s) - unobservable , publicity , action (physics) , distortion (music) , microeconomics , perception , public good , economics , marginal utility , willingness to pay , business , econometrics , computer science , psychology , marketing , amplifier , computer network , physics , bandwidth (computing) , quantum mechanics , neuroscience

We model privacy as an agent's choice of action being unobservable to others. An agent derives utility from his action, the aggregate of agents' actions, and other agents' perceptions of his type. If his action is unobservable, he takes his full-information optimal action and is pooled with other types, while if observable, then he distorts it to enhance others' perceptions of him. This increases the public good, but the disutility from distortion is a social cost. When the disutility of distortion is high (low) relative to the marginal utility of the public good, a policy of privacy (publicity) is optimal. (JEL D82, H41)

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