MARKET - Economics - Cyber Security - Overview of the Research Field

 

Overview of the Research Field of the Economics of Privacy

In the following, an introductory overview of the current research landscape is given. This overview is by no means complete, but it provides the interested reader with some guideposts for a start.

One suggestion for privacy and cyber-security (PACS) developers, firms and other stakeholders is to study the outcome of research conducted in their respective fields in order to develop a better understanding of the challenges that need to be mastered for a successful launch of a new product or service.

The research works discussed here also potentially enable a better understanding of why some of the business innovations may not work. Start-up problems for new business models in personal data markets might be associated with:

• A limited understanding of the functioning (or malfunctioning) of mechanisms in markets for personal data; and/or

 

• a limited understanding of the economic incentives of market participants involved in information trade.

 

To date, the economics of privacy has developed a diverse research field with different approaches employed and methods applied, where any taxonomy is necessarily incomplete.

 

 

The following lines of research were identified for IPACSO:

• Empirical works (experiments and surveys): This line of research includes modified classical experiments, as well as decision experiments with and without secure identification verification

 

• Hypothetical scenarios: This line of research presents subjects with hypothetical situations and asks for their attitudes or expected behaviors.

 

• Field experiments: In these experiments, subjects are not aware that they are participating in an experiment. These can be either survey-based experiments or incentivized monetary transactions

 

• Other research (including methodological advancements): In this line of research, methodological questions are at the center of focus. These are, for example, the development of privacy metrics as well as the measurement of privacy preferences.

 

Table 1 gives an overview of the research field. As stated above, this is not complete, but intended to be a guidepost.

Table 1 Overview of the Research Field of Privacy Economics

Line of Research	Type	Explanation	Authors	Identification mechanism	ID verification
Empirical works (experiments and surveys)
Classical experiments modified	IT	Traditional experiments are modified by introducing identification in Dictator Games, Ultimatum Game and other standard games. These experiments are incentivized with money.	Bohnet and Frey (1997, 1999), Charness and Gneezy (2008), Haley and Fessler (2005) Hoffman et al. (1996), Jenni and Loewenstein (1997)	In some works: name, in some pictures	None
Decision experiments without secure identity verification (SIV)	GT+IT	These are incentivized decision experiments that involve the purchase of a good together with an information transaction to be conducted by the subject	Beresford et al., BKP (2012), Gideon et al. (2006), Huberman et al. (2005), Tsai et al (2010)	None BKP (2012): name	None
Decision experiments with SIV	GT+IT	These are incentivized decision experiments that involve the purchase of a good together with an information transaction to be conducted by the subject	Feri et al. (2014) Jentzsch et al. (2012)	Name, test result, DOB, mobile phone number	Yes, 100% checked
Auctions without SIV	IT	In these experiments, subjects use an auction mechanism to set the price for their personal data	Danezis et al. (2005), Huberman et al. (2005)	Anonymous, IMAI and location	n/a
Auctions with SIV	IT	In these experiments, subjects use an auction mechanism to set the price for their personal data	Feri et al. (2014), Jentzsch (2014)	Name, test result	Yes, 100% checked
Hypothetical scenarios
Hypothetical scenarios	IT	Subjects are confronted with hypothetical scenarios of website policies, job search or insurance seeking	Andrade et al. (2002),  Baumer et al. (2005), Egelman et al. (2013), Spiekerman et al. (2001), Wathieu and Friedman (2007), Norberg et al. (2007)	None	None
Field experiments (including survey-based experiments)
Field experiments (composite transactions)	GT+IT	In these experiments, subjects are not aware that they are participating in an experiment as they purchase a good on the website	Jentzsch et al. (2012)	Name, DOB and mobile no.	None
Field experiments (IT)	IT	In these experiments, subjects are not aware that they participate in an experiment as they answer a survey on a website	Hui et al. (2007), John et al. (2010), Rifon et al. (2005)	None	None
Other research (including methodological research)
Data breach notifications and firm reputation	N/a	These works concentrate on the impact of announced data breaches on the stock prices of companies	Cavusoglu et al. (2004); Campbell et al. (2003); Muntermann and Roßnagel (2009)	N/a	N/a
Privacy metrics	N/a	In these works, different quantitative measures for privacy are proposed	Schulte-Melling (2014)	N/a	N/a
Privacy preference measurement	N/a	These are surveys that instrument the privacy concern by asking questions about attitudes, behaviors and perceptions.	Buchanan et al. (2006), Malhotra et al. (2004), Smith et al. (1996), Stewart et al. (2002)	None	None

 Notes to the Table: IT = information transaction, GT = goods transaction, N/a denoted either 'not available' or 'not applicable.'                      DOB denotes 'date of birth.'

 

 

Further IPACSO readings (in download section):

Jentzsch, N. (2015) State-of-the-Art of the Economics of Cyber-Security and Privacy, IPACSO - Innovation

Framework for ICT Security Deliverable 4.1.

 

Jentzsch, N. (2015) Horizontal and Vertical Analysis of Privacy and Cyber-security Markets, IPACSO

Innovation Framework for ICT Security Deliverable 4.2 A.

 

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