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No. 88 - Privacy, Openness and Trust

DigiWorld Economic Journal - C&S - 01/12/2012 No. 88 - Privacy, Openness and Trust

4th quarter 2012

Information and Communication Technologies (ICT), and the Internet in particular, offer companies the ability to collect large amounts of data about their users, and to use this information as a key input for value creation. New business models based on gathering and aggregating personal data and leveraging big data technologies, lead to innovative market offerings. To become successful, they depend on disclosure (openness) and trust on the users' side. Though the disclosure of personal information might benefit consumers via, for example, better tailored services, openness also creates risks of abuse of personal data, ranging from increasing market power (e.g., due to price discrimination) to privacy breaches by the data holder, or even cybercrime from initiatives of rogue third parties.

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Privacy, Openness and Trust

Edited by Vincent BONNEAU, Marc BOURREAU & Paul DE BIJL

By the Editors

An Online Survey Experiment on Ambiguity and Privacy

The Value of Personal Information
Evidence from Empirical Economic Studies


Public Perception of the Data Environment
and Information Transactions
A selected-survey analysis of the European public's views
on the data environment and data transactions


Secondary Uses of Personal Identity Information:
Policies, Technologies and Regulatory Framework

Joseph K. ADJEI & Henning OLESEN

Online Privacy in Social Media:
A Conceptual Exploration of Empowerment and Vulnerability



, President, CNIL
Conducted by Vincent BONNEAU

, Chief Economist at Google
Conducted by Marc BOURREAU


Regulation and Competition
How to Build a Customer/Prospect Database Lawfully in France

Chloé TORRÈS & Emeline BISSONI

Use Logics
Digital Trust: Trade-off Between Privacy Protection and Usage Value

Rethinking Personal Data

Book review
Tineke M. EGYEDI & Donna C. MEHOS (Eds): Inverse Infrastructures - Disrupting Networks from Below

Natascha JUST & Manuel PUPPIS (Eds):
Trends in Communication Policy Research: New Theories, Methods & Subjects

Author biographies

- 6e Assises de la Convergence des Médias, Paris, December 20th 2012 - L’avenir des médias passe-t-il par leur socialisation ?
- EURO CPR 2013, Brussels, March 21st-22nd 2013 - A Digital Agenda in Search of Evidence: Issues and Trends



Privacy, Openness and Trust

An Online Survey Experiment on Ambiguity and Privacy (*)
Key words: privacy, ambiguity, valuation of personal information, survey experiment

We provide three related approaches to better understand the connections between the literatures on the value of privacy, and economic decision-making. In particular, we consider economic scenarios where individuals lack important information about facets of a privacy choice and where the relevant outcomes of a choice are non-deterministic. We begin by highlighting the reasons why a lack of information by at least one party of a transaction is central to many privacy situations. We further comment on the foundations of the terms uncertainty, risk, and ambiguity and their relationship to privacy research. Next, to provide a practical example, we dissect the terms of a real-world sweepstakes solicitation to highlight the layers of complexity inherent in this specific offer, and other scenarios that involve collection and use of personal data. Finally, we provide evidence from an online survey experiment showing how an individual's valuation of a marketer's offer that is imprecise about material privacy terms of the bargain can be manipulated through simple reframing as a discount. In these scenarios, we study the valuation for thirteen different categories of sensitive personal information such as health information. We observe significant treatment differences between the original and the reframed offer that are mainly driven by the gender of the participants.

The Value of Personal Information : Evidence from Empirical Economic studies
Key words: consumer research, privacy, behaviour, experiments, new economy.

EC data protection policy is promoted with reference to economic benefits. However, the value of personal information in legitimate business models is rarely discussed. Various economic studies have tried to measure individuals' valuation of different kinds of personal data. We review empirical papers from the last 10 years and find evidence that more disclosure is associated with higher valuations. We find that the current research efforts can be extended to yield insights into the pricing of personal information, taking into account the actual value such information creates in legitimate business applications.

Public Perception of the Data Environment and Information Transactions
A selected-survey analysis of the European public's views on the data environment and data transactions
Key words: privacy, trust, personal data, data protection, privacy paradox, public opinion, consumer behaviour.

When engaging in data transactions, it has consistently been observed that individuals' behaviour does not correspond with individuals' theoretically stated preferences about privacy and the importance of personal data. This paper considers this 'paradox'. First, through an analysis of selected surveys, we elaborate a picture of how the public perceives the data environment and their interaction with it. We find that, whilst the public places significant weight on the values of privacy and data protection and has a formal understanding of the features of the data environment, there is a significant knowledge deficit relating to the specifics of data flows and processing. Although the public felt that they were being forced into engaging in an ever increasing number of data transactions, they lacked the clarity and understanding to evaluate the significance of these transactions either at the individual or social level. We then consider how these findings relate to specific transactions involving personal data transfer. Acquisti and Grossklags theorise that decision making may be unbalanced by limited information, bounded rationality issues, psychological distortions and ideology and personal attitudes. Using the findings from our selected survey analysis, we add substance to these claims. The lack of understanding of the data environment coupled with the necessity to act in this environment accounts for impacts on each limiting factor and reduces the ability for the individual to 'rationally' balance each transaction. Awareness of issues (and the importance allocated to personal data) on an abstract scale does not translate to the apparently corresponding action in concrete situations.

Secondary Uses of Personal Identity Information: Policies, Technologies and Regulatory Framework
Joseph K. ADJEI & Henning OLESEN
Key words: identity, identity management, personal information, secondary use, trust, privacy.

Although personal identity information must primarily be used for protecting and promoting the physical needs of individuals, it has also become central to the business models of the digital age due to its use for other secondary purposes, resulting in various innovative identity management (IdM) solutions in OECD countries. Nonetheless, developing countries have still not been able to address basic identification challenges such as civil registration, real-time credentials verifications, etc. This paper discusses a means of communicating identity-related concepts to policy-makers, technologists, credential issuers and other stakeholders by addressing core issues relating to secondary use of personal information. The results of a stakeholder workshop in Ghana on secondary use of personal information are presented by stating the core issues and recommendations. We propose the adaptation and application of existing IdM research and experiences from OECD countries to deal with issues involved in using personal information for secondary purposes.

Online Privacy in Social Media: A Conceptual Exploration of Empowerment and Vulnerability
Key words: social media, privacy, surveillance, empowerment, vulnerability.

Current transitions in the media and technology landscape go together with a shift from mass media and personal media to media for 'mass self-communication'. This is illustrated by the way that Web 2.0 or social media (like social network sites and micro-blogging) are becoming commercially engrained in Western everyday life, and the belief that the user is in the driver's seat of socio-technical innovation. However we observe a paradox. On the one hand the instruments and means for empowering users through social media are proliferating, reinforcing the idea of users effectively becoming empowered. On the other hand we find that empirical evidence about what user empowerment really consists of is too a large extent missing and that a risk of denial of the empowerment downside exists. After all if we indeed find opportunities for user empowerment, also the counterpart of disempowerment is at stake. The latter is particularly visible in the relation between social media, empowerment and privacy.
In this paper we take a closer look at how people's disempowerment and vulnerability is being reconfigured within the changing media landscape of mass self-communication. To illustrate these transitions, we focus on issues of privacy in relation to social media. In particular we take a critical view on how vulnerability takes shape in online consumer privacy. For this we first discuss the notions of mass self-communication, empowerment and privacy more generally. Next we highlight to what extent privacy for consumers using social media is different and how their vulnerability changes from an external and internal perspective. The transition from the classic view on privacy to online privacy to online consumer privacy illustrates that the notion 'privacy' needs to be rethought. The paper is based on a literature review to deconstruct and explore the key concepts empowerment, disempowerment, vulnerability and privacy in relation to mass self-communication and social media.

The Editors

Vincent BONNEAU is the director of the Internet Business Unit at IDATE, leading all the assignments and publications related to the internet industry and on emerging technologies. His activities are especially focused on technological and marketing innovations. Vincent is an expert on technical and business aspects related to internet services markets and Big Data. Prior to IDATE, he worked for the French Trade Commission (Economic Department of the Embassy of France) in San Francisco, USA as an analyst in charge of the software and web industries. He has also worked for marketing departments at several telecommunication companies including Noos (French leading cable operator, now Numericable), Wanadoo (now Orange) and France Telecom. Vincent graduated from leading French engineering schools Ecole Polytechnique and from Ecole Nationale Supérieure des Télécommunications. He was also a visiting student with the class of MSc from HEC (top business school in France) in IT Management.

Marc BOURREAU is Professor of Economics at Telecom ParisTech (formerly Ecole Nationale Supérieure des Télécommunications, Paris). He is also a research associate at the laboratory of industrial economics (LEI) of the Center for Research in Economics and Statistics (CREST). His main research interests are in industrial organization, regulation and network economics. Marc Bourreau is an Editor of Information Economics & Policy, a member of the Editorial Board of Telecommunications Policy, and a member of the International Editorial Board of Communications & Strategies. He has published several articles in peer-reviewed economics journals, such as the American Economic Review, the European Economic Review, the Journal of Industrial Economics, the International Journal of Industrial Organization, Information Economics & Policy, and Telecommunications Policy. Marc Bourreau received a master's degree in engineering science from Telecom ParisTech and a Ph.D. in economics from Université Paris 2 Panthéon-Assas.

Paul DE BIJL is head of the Competition & Regulation department at CPB Netherlands Bureau for Economic Policy Analysis, the Dutch government think-tank for economic policy, and extramural fellow of TILEC (Tilburg Center for Law and Economics), Tilburg University. He obtained a Ph.D. in Economics at Tilburg University (research partly carried out at the University of Toulouse, within the European doctoral program ENTER). He has experience in academia, business and policy. With Martin Peitz, Paul wrote the book Regulation and Entry into Telecommunications Markets (Cambridge University Press, 2002; Chinese translation 2006; paperback edition 2008), which has received positive critical acclaim from academics, consultants and regulators. He has published in various academic journals, including Telecommunications Policy, Journal of Information Policy, International Journal of Industrial Organization, Journal of Regulatory Economics and Information Economics and Policy. Paul is a member of the International Editorial Board of Communications & Strategies and the Editorial Board of the Journal of Information Policy. Paul's research interests include competition and regulatory economics, in particular applied to telecommunications markets, ICT markets and innovation policy.

The interviewees 

Isabelle FALQUE-PIERROTIN graduated in France from the HEC School of Business Management
("Ecole des Hautes Etudes Commerciales"), the National Administration School ("Ecole Nationale d'Administration") and the Multimedia Institute ("Institut Mutltimédia"). She first held various posts with the French State Council ("Conseil d'Etat"), as an "auditeur" from 1986 to 1989, a "maître des requêtes" (counsel) from 1989 to 2001 and was responsible of the relations with the print and broadcast media from 1988 to 1991. Ms. Falque-Pierrotin also served as Deputy Chair of the French Ministry of Culture and French-Speaking World Matters from 1993 to 1995. She became State Counselor ("Conseiller d'Etat") in November 2001. After serving as Chair of the Interministerial Commission on Internet Affairs in 1996, she was appointed as an expert adviser for the Organization for Economic Cooperation and Development (OECD) in 1997 and as "rapporteur général" of the report of the French State Council on "Internet and Digital Networks" from 1997 to 1998. From 2001 to December 2010, Ms. Falque-Pierrotin was Chair of the Advisory Board and General Delegate ("délegué générale") of the French Internet Rights Forum ("Forum des droits sur l'internet").Isabelle Falque-Pierrotin has been a member of the French Data Protection Authority ("Commission nationale de l'informatique et des libertés") since January 2004. Appointed as Deputy Chair of this authority from February 2009 to September 2011, she became its Chair as of September 21, 2011.

Hal R. VARIAN is the Chief Economist at Google. He started in May 2002 as a consultant and has been involved in many aspects of the company, including auction design, econometric analysis, finance, corporate strategy and public policy. He is also an emeritus professor at the University of California, Berkeley in three departments: business, economics, and information management. He received his SB degree from MIT in 1969 and his MA in mathematics and Ph.D. in economics from UC Berkeley in 1973. He has also taught at MIT, Stanford, Oxford, Michigan and other universities around the world. Dr. Varian is a fellow of the Guggenheim Foundation, the Econometric Society, and the American Academy of Arts and Sciences. He was Co-Editor of the American Economic Review from 1987-1990 and holds honorary doctorates from the University of Oulu, Finland and the University of Karlsruhe, Germany. Professor Varian has published numerous papers in economic theory, industrial organization, financial economics, econometrics and information economics. He is the author of two major economics textbooks which have been translated into 22 languages. He is the co-author of a bestselling book on business strategy, Information Rules: A Strategic Guide to the Network Economy and wrote a monthly column for the New York Times from 2000 to 2007.

The authors

Alessandro ACQUISTI is an Associate Professor of Information Technology and Public Policy at the Heinz College at Carnegie Mellon University and the co-director of CMU Center for Behavioral Decision Research (CBDR). He primarily conducts research on the economics of privacy and the behavioral economics of privacy as well as privacy in online social networks. He holds a Ph.D. from the School of Information at the University of California, Berkeley.

Joseph Kwame ADJEI is a Ph.D. Fellow at Aalborg University, Copenhagen (AAU-Cph), Denmark. He obtained his M.Sc. in information technology from London Southbank University, United Kingdom. His research focuses on Information privacy and developing better frameworks for implementing trusted identity management systems. His researches have been published in a number of conference proceedings and reputable journals including IEEE Vehicular Technology Magazine. Joseph is a fellow of the Chartered Association of Certified Accountants (ACCA). adjei@cmi.aau.dk

James ALLEMAN is a Professor Emeritus, University of Colorado, Boulder. Dr. Alleman was a visiting professor at the Graduate School of Business, Columbia University, and director of research at Columbia Institute of Tele-Information (CITI). Professor Alleman continues his involvement at CITI in research projects as a Senior Fellow.

Emeline BISSONI, a French attorney-at-law, is an associate in the Data Privacy department of the Alain Bensoussan law firm.

Michael FRIEDEWALD is heading the ICT Research Group at the Fraunhofer Institute for Systems and Innovation Research ISI in Karlsruhe, Germany. He is co-ordinating EU FP7 projects on privacy and data protection implications of emerging technologies, on smart surveillance and of the public perception of privacy and security. He holds diploma degrees in Electrical Engineering and Economics and a Ph.D. degree in Social Studies of Technology from RWTH Aachen University (Germany).

Moritz GODEL is a Senior Economic Consultant and leader of London Economics' Productivity, Innovation & New Economy team. Moritz's experience is focused on issues of industrial economics and public policy and spans sectors including automotive, retail, financial services, electricity, transport and software and online services. Moritz has been in charge of designing complex bespoke methodologies using cutting-edge analytical tools and has conducted data-intensive analysis for clients that include some of Europe's largest companies as well as governments in the UK, Europe and the Middle East. He has substantial experience in the area of Intellectual Property Rights and information technology and has led large-scale studies on the European internet services industry and privacy technologies for the European Commission. Moritz has spent time on secondment to the UK Competition Commission and has Master's degrees in Economics (University College London) and European Competition Law (King's College London).

Jens GROSSKLAGS is an Assistant Professor at the College of Information Sciences and Technology at the Pennsylvania State University, where he is also affiliated with the Security and Risk Analysis program. His research is focused on the economics of security, and the study of privacy attitudes and behaviors. He graduated with a Ph.D. from the School of Information at the University of California, Berkeley.

Dara HALLINAN works in the ICT Research Group at the Fraunhofer Institute for Systems and Innovation Research ISI in Karlsruhe, Germany. He works on a range of projects focused on the privacy and data protection implications of emerging technologies. He is working towards his Ph.D. in Law at the Vrije Universiteit Brussel and holds a degree in Law and German and a Master's in Human Rights and Democracy.

Annabel LITCHFIELD is an Economic Consultant at London Economics. Annabel holds a first class honours degree from the London School of Economics. Prior to joining London Economics, Annabel worked at the Office of Fair Trading as an Economist Intern. At London Economics, Annabel plays a key role in data-intensive projects using econometric and statistical modeling techniques. Annabel is a member of the London Economics' Productivity, Innovation & New Economy team and has worked on studies related to the internet services industry and internet domains in particular.

Sophie LUBRANO is Senior Consultant at IDATE. Sophie is specialised in demand analysis, particularly in the area of consumer applications. She also contributes her expertise in supply analysis, notably companies' internet service strategies. Her assignments focus on various aspects of the telecom industry: internet, media, landline and mobile telephony. Prior to joining IDATE, Sophie was an economic consultant for B.I.P.E., where she was in charge of telecom market monitoring. Ms. Pernet is an economist, with a post-graduate degree from ESLSCA (Ecole Supérieure Libre des Sciences Commerciales Appliquées).

Iris MANTOVANI is a Junior Economic Consultant at London Economics. Iris holds a first class honours degree from New York University and was awarded a distinction on completion of the MSc in Economics at the London School of Economics. During the course of her studies, Iris was a graduate teaching assistant for the London School of Economics, teaching undergraduate level micro and macroeconomics. Since joining London Economics, Iris has worked on a number of studies for both corporate and government clients, focusing on primary data collection and the econometric analysis of survey data. Iris is a member of the London Economics' Productivity, Innovation & New Economy team.

Alan MITCHELL is Strategy Director at Ctrl-Shift, the consumer empowerment specialists. He serves on the Project Board of the UK Government's midata initiative and on the Steering Committee of Harvard Law School's Project VRM.

Henning OLESEN has been an associate professor at AAU (CMI) since 2008. He holds MSc EE and Ph.D. degrees from the Technical University of Denmark (DTU). From 1980-1995 he did research in the area of optoelectronics and optical communication, first at DTU and from 1984-1995 at TFL / Tele Danmark Research. From 1996-1999 he was with Tele Danmark R&D and a member of the core team for Tele Danmark's Media Centre. From 1999-2008 he was an associate professor at DTU. His main research interests are mobile services and service architectures, user requirements, and new solutions for personalization, privacy and identity management. In 2004-2008 he was leading tasks on "User requirements" and "User profiles" in the IST projects MAGNET and MAGNET Beyond. He has authored or co-authored about 100 international journal and conference papers and is a co-editor of two WWRF whitepapers on service creation and user profiles. He is also the coordinator for the MSc programme in Innovative Communication Technologies and Entrepreneurship at AAU. olesen@cmi.aau.dk

Jo PIERSON is professor in Use and Innovation of New Media in the Department of Media and Communication Studies at the Vrije Universiteit Brussel (Brussels, Belgium). He is also Senior Researcher and staff member at the research centre SMIT (Studies on Media, Information and Telecommunication) since 1996. In this position he coordinates the User Empowerment unit in the Digital Society research department of IBBT (Interdisciplinary Institute for Broadband Technology). In the past he has worked as researcher-advisor for the Dutch knowledge institute TNO in Delft. He holds a Ph.D. in Social Science (Media and Communication Studies) since 2003. He lectures on undergraduate and Master courses, covering socio-economic issues relating to the information society, digital media marketing and research methods. His research focus is on usage, innovation and privacy in new media. Jo.Pierson@vub.ac.be

Andrew SCHROCK is a Ph.D. candidate at the Annenberg School for Communication & Journalism at the University of Southern California. His research focuses on the mobile web, social media and online collectives. He is currently a member of Henry Jenkins' Civic Paths group and a student fellow at the Annenberg Innovation Lab. Please see www.andrewrschrock.com for a detailed list of publications, links and open courseware.

Chloé TORRES, a French attorney-at-law, is the Head of the Data Privacy department of the Alain Bensoussan law firm. Her practice includes a wide range of data-privacy matters (privacy policies, code of ethics, compliance audits, appointment and management of data protection officers, relationship with data protection authorities [e.g. notification, inspections]). She has particular expertise in knowledge management, e-learning and internet matters. She teaches at Ionis School of Technology and Management and ENST. She is also the data protection officer of the Alain Bensoussan law firm.




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