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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 payout, 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. --

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Paper provided by Social Science Research Center Berlin (WZB) in its series Discussion Papers, Research Unit: Market Behavior with number SP II 2013-208.

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Date of creation: 2013
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Handle: RePEc:zbw:wzbmbh:spii2013208

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Keywords: information revelation; privacy; lemons market; level-k reasoning; quantalresponse equilibrium; inequality aversion;

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