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

  • Volker Benndorf
  • Dorothea Kübler
  • Hans-Theo Normann

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.

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Paper provided by Sonderforschungsbereich 649, Humboldt University, Berlin, Germany in its series SFB 649 Discussion Papers with number SFB649DP2013-040.

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Length: 37 pages
Date of creation: Sep 2013
Date of revision:
Handle: RePEc:hum:wpaper:sfb649dp2013-040
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