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Privacy concerns, voluntary disclosure of information, and unraveling: An experiment

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  • Benndorf, Volker
  • Kübler, Dorothea
  • Normann, Hans-Theo

Abstract

We study the voluntary revelation of private, personal information in a labor-market experiment with a lemons structure where workers can reveal their productivity at a cost. While rational revelation improves a worker's payo , it imposes a negative externality on others and may trigger further unraveling. Our data suggest that subjects reveal their productivity less frequently than predicted in equilibrium. A loaded frame emphasizing personal information about workers' health leads to even less revelation. We show that three canonical behavioral models all predict too little rather than too much revelation: level-k reasoning, quantal-response equilibrium, and to a lesser extent inequality aversion.

Suggested Citation

  • Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2013. "Privacy concerns, voluntary disclosure of information, and unraveling: An experiment," SFB 649 Discussion Papers 2013-040, Humboldt University Berlin, Collaborative Research Center 649: Economic Risk.
    • Handle: RePEc:zbw:sfb649:sfb649dp2013-040
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    More about this item

    Keywords

    information revelation; privacy; lemons market; level-k reasoning; quantal response equilibrium; inequality aversion;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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