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The effect of privacy concerns on social network formation

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  • Gaudeul, Alexia
  • Giannetti, Caterina

Abstract

We study the impact of revealing personal information on the selection of partners when forming individual networks. In our experiment, a “contribution phase” is followed by a “network phase”: individuals first decide whether to contribute and then decide with whom to form a link. An exchange of contributions between individuals occurs only if a bilateral link is established. We identify the effect of revealing one's name on the probability of link formation by letting individuals choose to signal – at the linking stage – their willingness to later reveal their name. Our results indicate that this decision significantly affects partner selection and the consequent structure of the network. Individuals who reveal their name build up smaller individual networks but attain higher profits. Incurring privacy costs by revealing personal information is compensated with a higher probability to establish mutual links with contributors.

Suggested Citation

  • Gaudeul, Alexia & Giannetti, Caterina, 2017. "The effect of privacy concerns on social network formation," Journal of Economic Behavior & Organization, Elsevier, vol. 141(C), pages 233-253.
  • Handle: RePEc:eee:jeborg:v:141:y:2017:i:c:p:233-253
    DOI: 10.1016/j.jebo.2017.07.007
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    References listed on IDEAS

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    More about this item

    Keywords

    Privacy; Social networks; Public goods; Trust;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation

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