The right price for our personal data

privacyFor a long time academic researchers have tried to understand how much people value their privacy, i.e., their personal data in a panorama where information about customers' habits and attitudes is the key to more profitable business. The answers have been found to depend on the context and on the personal condition of the individual customer. On the overall, customers appear to claim their privacy but not to be willing to pay for it (which leads to the conclusion that they do not value it so much). Another significant conclusion is that privacy valuation is subject to the endowment effect:  customers who enjoy a greater privacy protection value it more than people whose privacy is less protected. You can find an up-to-date summary of those studies in a recent paper ("The Economics of Privacy: Theoretical and Empirical Aspects") by prof. Alessandro Acquisti. We have also shown that the willingness of customers to trade their personal data in return for discounts on services or small gifts should be considered when designing policies to incentivize service providers to invest in security ("A Game-Theoretic Formulation of Security Investment Decisions under Ex-ante Regulation" and "Liability for Data Breaches: A Proposal for a Revenue-Based Sanctioning Approach").

Those studies were based on estimates or experiments, in the absence of direct  observations of an established market for personal data. However, in a recent post by Wolf Richter (a San Francisco based executive, entrepreneur, start up specialist), the existence of real offers for personal data is revealed. We learn that Google is willing to pay for us to let them install a special router on our premises (well, at least Google has offered him such a chance). This router (named the Screenwise router) would collect all the data concerning our activity on the Internet (in the words of Mr. Richter: "where you bank, the brokers you use, how often you visit their sites, what trading software you use, your internet phone calls, Skype conversations, instant messages, email, what health issues you might be dealing with, the porn sites you or your kids visit, where you’d like go to dinner"). And how much would they pay for all this information? In addition to the set-up reward of 225$, they would pay 30$ per month for the first computer and 5$ per month for each additional participating Wi-Fi-enabled electronic device. Not a lot, to be honest….Are we going to see a real market for personal data?

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