IDEAS home Printed from https://ideas.repec.org/p/hum/wpaper/sfb649dp2013-040.html
   My bibliography  Save this paper

Privacy Concerns, Voluntary Disclosure of Information, and Unraveling: An Experiment

Author

Listed:
  • Volker Benndorf
  • Dorothea Kübler
  • Hans-Theo Normann

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 payoff, 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.

Suggested Citation

  • Volker Benndorf & Dorothea Kübler & Hans-Theo Normann, 2013. "Privacy Concerns, Voluntary Disclosure of Information, and Unraveling: An Experiment," SFB 649 Discussion Papers SFB649DP2013-040, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    • Handle: RePEc:hum:wpaper:sfb649dp2013-040
    as

    Download full text from publisher

    File URL: http://sfb649.wiwi.hu-berlin.de/papers/pdf/SFB649DP2013-040.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Hoffman Elizabeth & McCabe Kevin & Shachat Keith & Smith Vernon, 1994. "Preferences, Property Rights, and Anonymity in Bargaining Games," Games and Economic Behavior, Elsevier, vol. 7(3), pages 346-380, November.
    2. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(3), pages 817-869.
    3. Ernst Fehr & Klaus M. Schmidt, 1999. "A Theory of Fairness, Competition, and Cooperation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(3), pages 817-868.
    4. Stahl Dale O. & Wilson Paul W., 1995. "On Players' Models of Other Players: Theory and Experimental Evidence," Games and Economic Behavior, Elsevier, vol. 10(1), pages 218-254, July.
    5. Potters, Jan & van Winden, Frans, 1996. "Comparative Statics of a Signaling Game: An Experimental Study," International Journal of Game Theory, Springer;Game Theory Society, vol. 25(3), pages 329-353.
    6. Brañas-Garza, Pablo & García-Muñoz, Teresa & González, Roberto Hernán, 2012. "Cognitive effort in the Beauty Contest Game," Journal of Economic Behavior & Organization, Elsevier, vol. 83(2), pages 254-260.
    7. Antoni Bosch-Domènech & José G. Montalvo & Rosemarie Nagel & Albert Satorra, 2002. "One, Two, (Three), Infinity, ...: Newspaper and Lab Beauty-Contest Experiments," American Economic Review, American Economic Association, vol. 92(5), pages 1687-1701, December.
    8. Kübler, Dorothea & Müller, Wieland & Normann, Hans-Theo, 2008. "Job-market signaling and screening: An experimental comparison," Games and Economic Behavior, Elsevier, vol. 64(1), pages 219-236, September.
    9. Gregory Lewis, 2011. "Asymmetric Information, Adverse Selection and Online Disclosure: The Case of eBay Motors," American Economic Review, American Economic Association, vol. 101(4), pages 1535-1546, June.
    10. 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 461-483, December.
    11. Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2015. "Privacy concerns, voluntary disclosure of information, and unraveling: An experiment," European Economic Review, Elsevier, vol. 75(C), pages 43-59.
    12. Philip A. Haile & Ali Hortaçsu & Grigory Kosenok, 2008. "On the Empirical Content of Quantal Response Equilibrium," American Economic Review, American Economic Association, vol. 98(1), pages 180-200, March.
    13. W. Kip Viscusi, 1978. "A Note on "Lemons" Markets with Quality Certification," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 277-279, Spring.
    14. Beresford, Alastair R. & Kübler, Dorothea & Preibusch, Sören, 2012. "Unwillingness to pay for privacy: A field experiment," Economics Letters, Elsevier, vol. 117(1), pages 25-27.
    15. Vincent P. Crawford & Nagore Iriberri, 2007. "Level-k Auctions: Can a Nonequilibrium Model of Strategic Thinking Explain the Winner's Curse and Overbidding in Private-Value Auctions?," Econometrica, Econometric Society, vol. 75(6), pages 1721-1770, November.
    16. McKelvey Richard D. & Palfrey Thomas R., 1995. "Quantal Response Equilibria for Normal Form Games," Games and Economic Behavior, Elsevier, vol. 10(1), pages 6-38, July.
    17. Ginger Zhe Jin & Andrew Kato, 2006. "Price, quality, and reputation: evidence from an online field experiment," RAND Journal of Economics, RAND Corporation, vol. 37(4), pages 983-1005, December.
    18. Martin G. Kocher & Matthias Sutter, 2005. "The Decision Maker Matters: Individual Versus Group Behaviour in Experimental Beauty-Contest Games," Economic Journal, Royal Economic Society, vol. 115(500), pages 200-223, January.
    19. David J. Cooper & Susan Garvin & John H. Kagel, 1997. "Signalling and Adaptive Learning in an Entry Limit Pricing Game," RAND Journal of Economics, The RAND Corporation, vol. 28(4), pages 662-683, Winter.
    20. Blanco, Mariana & Engelmann, Dirk & Normann, Hans Theo, 2011. "A within-subject analysis of other-regarding preferences," Games and Economic Behavior, Elsevier, vol. 72(2), pages 321-338, June.
    21. Goeree, Jacob K. & Holt, Charles A., 2004. "A model of noisy introspection," Games and Economic Behavior, Elsevier, vol. 46(2), pages 365-382, February.
    22. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring.
    23. Ayala Arad & Ariel Rubinstein, 2012. "The 11-20 Money Request Game: A Level-k Reasoning Study," American Economic Review, American Economic Association, vol. 102(7), pages 3561-3573, December.
    24. Michael Ostrovsky & Michael Schwarz, 2010. "Information Disclosure and Unraveling in Matching Markets," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 34-63, May.
    25. Boyan Jovanovic, 1982. "Truthful Disclosure of Information," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 36-44, Spring.
    26. Nagel, Rosemarie, 1995. "Unraveling in Guessing Games: An Experimental Study," American Economic Review, American Economic Association, vol. 85(5), pages 1313-1326, December.
    27. Brandts, Jordi & Holt, Charles A, 1992. "An Experimental Test of Equilibrium Dominance in Signaling Games," American Economic Review, American Economic Association, vol. 82(5), pages 1350-1365, December.
    28. Ginger Zhe Jin & Phillip Leslie, 2003. "The Effect of Information on Product Quality: Evidence from Restaurant Hygiene Grade Cards," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(2), pages 409-451.
    29. 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.
    30. Lindner, Florian & Sutter, Matthias, 2013. "Level-k reasoning and time pressure in the 11–20 money request game," Economics Letters, Elsevier, vol. 120(3), pages 542-545.
    31. Engelmann, Dirk, 2012. "How not to extend models of inequality aversion," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 599-605.
    32. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
    33. Kübler, D. & Müller, W. & Normann, H.T., 2008. "Job-market signalling and screening : An experimental study," Other publications TiSEM e60074dd-75cb-47df-965c-a, Tilburg University, School of Economics and Management.
    34. Robert Forsythe & R. Mark Isaac & Thomas R. Palfrey, 1989. "Theories and Tests of "Blind Bidding" in Sealed-Bid Auctions," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 214-238, Summer.
    35. Miller, Ross M & Plott, Charles R, 1985. "Product Quality Signaling in Experimental Markets," Econometrica, Econometric Society, vol. 53(4), pages 837-872, July.
    36. Benjamin Hermalin & Michael Katz, 2006. "Privacy, property rights and efficiency: The economics of privacy as secrecy," Quantitative Marketing and Economics (QME), Springer, vol. 4(3), pages 209-239, September.
    37. Ginger Zhe Jin, 2005. "Competition and Disclosure Incentives: An Empirical Study of HMOs," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 93-112, Spring.
    38. Konow, James, 1996. "A positive theory of economic fairness," Journal of Economic Behavior & Organization, Elsevier, vol. 31(1), pages 13-35, October.
    39. Simeon Schudy & Verena Utikal, 2012. "The Influence of (Im)perfect Data Privacy on the Acquisition of Personal Health Data," Working Paper Series of the Department of Economics, University of Konstanz 2012-12, Department of Economics, University of Konstanz.
    40. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
    41. David J. Cooper & John H. Kagel, 2009. "The Role of Context and Team Play in Cross-Game Learning," Journal of the European Economic Association, MIT Press, vol. 7(5), pages 1101-1139, September.
    42. Colin F. Camerer & Teck-Hua Ho & Juin-Kuan Chong, 2004. "A Cognitive Hierarchy Model of Games," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(3), pages 861-898.
    43. Martin, Stephen & Normann, Hans-Theo & Snyder, Christopher M, 2001. "Vertical Foreclosure in Experimental Markets," RAND Journal of Economics, The RAND Corporation, vol. 32(3), pages 466-496, Autumn.
    44. de Haan, Thomas & Offerman, Theo & Sloof, Randolph, 2011. "Noisy signaling: Theory and experiment," Games and Economic Behavior, Elsevier, vol. 73(2), pages 402-428.
    45. Grossman, S J & Hart, O D, 1980. "Disclosure Laws and Takeover Bids," Journal of Finance, American Finance Association, vol. 35(2), pages 323-334, May.
    46. Teck-Hua Ho & Xuanming Su, 2013. "A Dynamic Level-k Model in Sequential Games," Management Science, INFORMS, vol. 59(2), pages 452-469, March.
    47. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    48. Kawagoe, Toshiji & Takizawa, Hirokazu, 2012. "Level-k analysis of experimental centipede games," Journal of Economic Behavior & Organization, Elsevier, vol. 82(2), pages 548-566.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Ying Xue & Schipper, Burkhard C., 2020. "Strategic reasoning in persuasion games: An experiment," Games and Economic Behavior, Elsevier, vol. 121(C), pages 329-367.
    2. Volker Benndorf, 2018. "Voluntary Disclosure of Private Information and Unraveling in the Market for Lemons: An Experiment," Games, MDPI, vol. 9(2), pages 1-17, May.
    3. Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2022. "Behavioral Forces Driving Information Unraveling," Rationality and Competition Discussion Paper Series 354, CRC TRR 190 Rationality and Competition.
    4. Benndorf, Volker & Kübler, Dorothea & Normann, Hans-Theo, 2023. "Behavioral forces driving information unraveling," Discussion Papers, Research Unit: Market Behavior SP II 2023-207, WZB Berlin Social Science Center.
    5. Choo, Lawrence C.Y & Kaplan, Todd R., 2014. "Explaining Behavior in the "11-20" Game," MPRA Paper 52808, University Library of Munich, Germany.
    6. Volker Benndorf & Dorothea Kübler & Hans-Theo Normann, 2017. "Depth of Reasoning and Information Revelation: An Experiment on the Distribution of k-Levels," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 19(04), pages 1-18, December.
    7. Bayer, R.-C. & Renou, Ludovic, 2016. "Logical abilities and behavior in strategic-form games," Journal of Economic Psychology, Elsevier, vol. 56(C), pages 39-59.
    8. Tom Lane & Minghai Zhou, 2022. "Failure of unravelling theory? A natural field experiment on voluntary quality disclosure," Discussion Papers 2022-17, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    9. Georganas, Sotiris, 2011. "English auctions with resale: An experimental study," Games and Economic Behavior, Elsevier, vol. 73(1), pages 147-166, September.
    10. Montero, Maria & Sheth, Jesal D., 2021. "Naivety about hidden information: An experimental investigation," Journal of Economic Behavior & Organization, Elsevier, vol. 192(C), pages 92-116.
    11. Nichole Szembrot, 2018. "Experimental study of cursed equilibrium in a signaling game," Experimental Economics, Springer;Economic Science Association, vol. 21(2), pages 257-291, June.
    12. Georganas, Sotiris & Healy, Paul J. & Weber, Roberto A., 2015. "On the persistence of strategic sophistication," Journal of Economic Theory, Elsevier, vol. 159(PA), pages 369-400.
    13. Quement, Mark T. Le & Marcin, Isabel, 2020. "Communication and voting in heterogeneous committees: An experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 174(C), pages 449-468.
    14. Breitmoser, Yves, 2019. "Knowing me, imagining you: Projection and overbidding in auctions," Games and Economic Behavior, Elsevier, vol. 113(C), pages 423-447.
    15. Nagel, Rosemarie & Bühren, Christoph & Frank, Björn, 2017. "Inspired and inspiring: Hervé Moulin and the discovery of the beauty contest game," Mathematical Social Sciences, Elsevier, vol. 90(C), pages 191-207.
    16. Mark T. Le Quement & Isabel Marcin, 2016. "Communication and voting in heterogeneous committees: An experimental study," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2016_05, Max Planck Institute for Research on Collective Goods, revised Oct 2016.
    17. Ginger Zhe Jin & Michael Luca & Daniel Martin, 2021. "Is No News (Perceived As) Bad News? An Experimental Investigation of Information Disclosure," American Economic Journal: Microeconomics, American Economic Association, vol. 13(2), pages 141-173, May.
    18. Burkhard Schipper & Ying Xue Li, 2018. "Strategic Reasoning in Persuasion Games: An Experiment," Working Papers 181, University of California, Davis, Department of Economics.
    19. Le Coq, Chloé & Tremewan, James & Wagner, Alexander K., 2015. "On the effects of group identity in strategic environments," European Economic Review, Elsevier, vol. 76(C), pages 239-252.
    20. García-Pola, Bernardo & Iriberri, Nagore & Kovářík, Jaromír, 2020. "Non-equilibrium play in centipede games," Games and Economic Behavior, Elsevier, vol. 120(C), pages 391-433.

    More about this item

    Keywords

    information revelation; privacy; lemons market; level-k reasoning; quantal response equilibrium; inequality aversion;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hum:wpaper:sfb649dp2013-040. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: RDC-Team (email available below). General contact details of provider: https://edirc.repec.org/data/sohubde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.