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

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  • Andrew F. Daughety
  • Jennifer F. Reinganum

Abstract

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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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Journal: Microeconomics.

Volume (Year): 2 (2010)
Issue (Month): 2 (May)
Pages: 191-221

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Handle: RePEc:aea:aejmic:v:2:y:2010:i:2:p:191-221

Note: DOI: 10.1257/mic.2.2.191
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References

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  1. Vesterlund, Lise, 2003. "The informational value of sequential fundraising," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 627-657, March.
  2. Alessandro Pavan, 2004. "On the Optimality of Privacy in Sequential Contracting," Theory workshop papers 658612000000000067, UCLA Department of Economics.
  3. Leslie M. Marx & Steven A. Matthews, . ""Dynamic Voluntary Contribution to a Public Project''," CARESS Working Papres 99-01, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
  4. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn.
  5. Mailath, George J, 1987. "Incentive Compatibility in Signaling Games with a Continuum of Types," Econometrica, Econometric Society, vol. 55(6), pages 1349-65, November.
  6. Michael Ostrovsky & Michael Schwarz, 2008. "Information Disclosure and Unraveling in Matching Markets," NBER Working Papers 13766, National Bureau of Economic Research, Inc.
  7. Linardi, Sera & McConnell, Margaret A., 2008. "Volunteering and image concerns," Working Papers 1282, California Institute of Technology, Division of the Humanities and Social Sciences.
  8. Andrew F. Daughety & Jennifer F. Reinganum, 2007. "Communicating Quality: A Unified Model of Disclosure and Signaling," Vanderbilt University Department of Economics Working Papers 0703, Vanderbilt University Department of Economics.
  9. Romano, Richard & Yildirim, Huseyin, 2001. "Why charities announce donations: a positive perspective," Journal of Public Economics, Elsevier, vol. 81(3), pages 423-447, September.
  10. George J. Stigler, 1980. "An Introduction to Privacy in Economics and Politics," University of Chicago - George G. Stigler Center for Study of Economy and State 10, Chicago - Center for Study of Economy and State.
  11. Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
  12. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-83, December.
  13. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, December.
  14. Harbaugh, William T., 1998. "What do donations buy?: A model of philanthropy based on prestige and warm glow," Journal of Public Economics, Elsevier, vol. 67(2), pages 269-284, February.
  15. Curtis R. Taylor, 2004. "Consumer Privacy and the Market for Customer Information," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 631-650, Winter.
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Cited by:
  1. Cartwright, Edward & Patel, Amrish, 2013. "How category reporting can improve fundraising," Journal of Economic Behavior & Organization, Elsevier, vol. 87(C), pages 73-90.
  2. Bruno Deffains & Claude Fluet, 2009. "Legal Liability when Individuals Have Moral Concerns," Cahiers de recherche 0951, CIRPEE.
  3. Avi Goldfarb, 2014. "What is Different About Online Advertising?," Review of Industrial Organization, Springer, vol. 44(2), pages 115-129, March.

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