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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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    Cited by:

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    2. Viola Ackfeld & Werner Güth, 2019. "Personal Information Disclosure under Competition for Benefits: Is Sharing Caring?," Discussion Paper Series of the Max Planck Institute for Behavioral Economics 2019_04, Max Planck Institute for Behavioral Economics.
    3. Han, Xintong & Li, Yushen & Wang, Tong, 2023. "Peer recognition, badge policies, and content contribution: An empirical study," Journal of Economic Behavior & Organization, Elsevier, vol. 214(C), pages 691-707.
    4. Julia M. Puaschunder, 2018. "Towards a Utility Theory of Privacy and Information Sharing and the Introduction of Hyper-Hyperbolic Discounting in the Digital Big Data Age," RAIS Collective Volume – Economic Science 01, Research Association for Interdisciplinary Studies.
    5. Ackfeld, Viola & Güth, Werner, 2023. "Personal information disclosure under competition for benefits: Is sharing caring?," Games and Economic Behavior, Elsevier, vol. 140(C), pages 1-32.

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    JEL classification:

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

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