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Law, economics and privacy : implications of government policies on website and third-party information sharing
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Gopal, Ram D., Hidaji, Hooman, Kutlu, Sule Nur, Patterson, Raymond A. and Yaraghi, Niam (2023) Law, economics and privacy : implications of government policies on website and third-party information sharing. Information Systems Research . doi:10.1287/isre.2022.1178 ISSN 1047-7047. (In Press)
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Official URL: https://doi.org/10.1287/isre.2022.1178
Abstract
Widespread abuse of internet users’ privacy online has prompted user advocacy groups to implore governments to intervene and protect consumer rights. To study such interventions’ effects, we examine data-protection policies that policy makers and governments can enforce on websites, including consent-based user information sharing and subsidizing competing websites. We use a stylized analytical model to examine such policies’ impact on the decisions and outcomes of websites, users, and third-parties. Interestingly, we find that even though a consent-based policy may improve user surplus, in the absence of market entry and exit (static market), it has the unintended consequence of increasing the number of third-parties and, thus, sharing of user information. We also determine that both consent-based and website subsidization policies may reduce competition by driving websites out of the market—to the detriment of user surplus and social welfare. To validate our analytical model’s findings, we empirically investigated the impact of a consent-based policy on third-parties in a natural experiment of the California Consumer Privacy Act. These findings raise significant implications for policy making surrounding online privacy.
| Item Type: | Journal Article | ||||||||
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| Subjects: | K Law [Moys] > KM Common Law, Public Law | ||||||||
| Divisions: | Faculty of Social Sciences > Warwick Business School > Information Systems & Management Faculty of Social Sciences > Warwick Business School |
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| Library of Congress Subject Headings (LCSH): | Data protection -- Law and legislation, Privacy, Right of, Internet -- Security measures, Computer security | ||||||||
| Journal or Publication Title: | Information Systems Research | ||||||||
| Publisher: | Institute for Operations Research and the Management Sciences | ||||||||
| ISSN: | 1047-7047 | ||||||||
| Official Date: | 2023 | ||||||||
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| DOI: | 10.1287/isre.2022.1178 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | In Press | ||||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||||
| Copyright Holders: | Copyright © 2023 The Author(s) | ||||||||
| Date of first compliant deposit: | 30 August 2022 | ||||||||
| Date of first compliant Open Access: | 31 August 2022 | ||||||||
| Related URLs: |
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