Privacy Protection and Risk Attitudes

Privacy Protection
and Risk Attitudes

Alisa Frik and Alexia Gaudeul
Universit degli Studi di Trento
Georg-August-Universitt Gttingen
ESA Jerusalem 2016
2 Motivation
Currently established methods for assessing
the value of privacy:
WTP / WTA payment to avoid personal
information being revealed to others
Surveys with questionnaire on attitudes and

behavior in terms of privacy protection.
Privacy and risk attitudes - Frik & Gaudeul - ESA Jerusalem
Sunday, 4 Tammuz, 5776
3 Motivation
Those elicitation methods do not replicate
actual decisions people make.
Risk to privacy are not 0-1 decisions.
People are rarely faced with the certainty of a loss
of privacy, to be traded. Rather, they are faced with
the probability of a loss.
Not incentivized or incentives too complex to
understand.
Stated preferences differ from observed

preferences.
4 Contributions
1. Original method to elicit concern for
privacy.
2. New method of elicitation of privacy
valuations, by using privacy lotteries.
We indirectly obtain implicit valuation of privacy.
3. Test of the relation between privacy and

risk attitudes.
We elicit attitudes vs. monetary risk.
We compare those with the willingness to protect

private information.
Design
1. Generation of private
information
2. Lotteries and MPL
3. Controls
Privacy and risk attitudes - Frik & Gaudeul

- ESA Jerusalem
6 Generation of privacy concern

Name and surname + picture.
14 questions about sensitive and socially relevant
topics, on which opinions differ in the population.
Abortion
Illegal immigration
Contraception
etc
This means there is no way to answer in a way

that is agreeable to all.
But some people may enjoy getting their opinion known!
7 Information revealed to others

Name and surname announced to others.
Subjects stands in front of others in the

lab.
Participants see information on their
screen as shown in the next slide:
8 Information revealed to others

Seat #23:
thinks it is morally justified to abort after
discovering serious disability in the fetus, while
36 % of other participants do not agree
is in favor of chemical castration as and
appropriate penalty for rape, while 87% of
other participants did not choose this option
...
...
9 Monetary lotteries
Row Option A
Option B
4 lists
You get
56 ECU
You get 55 ECU, but with probability 30 %

you lose 10 of those ECUs
You get
55 ECU

You get
54 ECU

You get
53 ECU

You get
52 ECU

You get
51 ECU

You get
50 ECU

You get
49 ECU

You get
48 ECU

10
You get
47 ECU

11
You get
46 ECU

Privacyyou
andlose
risk10attitudes
Frik & Gaudeul - ESA Jerusalem
of those -ECUs
always 30% chance to

get info revealed
safe payoff is either 55,
65, 75 or 35 ECU.
10 ECU = 1 euro
Value of loss of 10, 30
or 50, or a gain of 30
ECU.
Note how we allow

for a full range of risk
attitudes.
10 Privacy lotteries
Row Option A
Option B
You get 56
ECU

your personal information is disclosed
You get 55
ECU

You get 54
ECU

You get 53
ECU

You get 52
ECU

You get 51
ECU

You get 50
ECU

You get 49
ECU

You get 48
ECU

10
You get 47
ECU

11
You get 46
ECU

Privacy
and risk
attitudes -isFrik
& Gaudeul - ESA Jerusalem
your personal
information
disclosed
Same as monetary
lotteries but
replace gain/loss
with information
disclosure.
We allow for
negative values
for privacy.
11 Controls
Age, gender, education, revenues, ...
Order of elicitation (monetary, privacy).

Unavoidable risk of disclosure or not.
Questionnaire-based indexes of privacy
attitudes.
WTP and WTA payment for privacy disclosure.
Trust in others, other people known, trust in

experimenter, ...
Results
12

- ESA Jerusalem
13 Data
May/June 2015
University of Trento, Italy

148 subjects
8 sessions
2x2 treatments (order of elicitation,
unavoidable risk to privacy).
14 Statistics
Monetary risk attitude.
1 + =
=
Index of aversion to privacy disclosure.

= 70% + 30%
=
Warning: This is not a value for private information.
15 Regression of v over r
Panel random effect GLS regressions.
1. Positive relation of v with r subjects who
are more risk averse also are more averse
to privacy disclosure.
Does not mean they have higher privacy valuation!
2. Higher index if privacy fundamentalists,

lower if know more other participants,
lower if trust strangers.
3. Robustness check: Number of safe choice in
privacy tasks rather than v.
16 Implicit privacy values

1. (1 + ) = 70% + 30% so
(+)
that =
%
2. Correcting privacy values with risk attitudes,

we find that many people have negative values
for privacy.
1.
WTA 16 average, all positive.
2.
WTP 2 average, all positive.
3.
Index v: 2.5 average, 2% negative.
4.
Implicit v: 0.4 average, 53% negative.
Maybe due to subject pool / specific elicitation of

concern for privacy.
Implicit valuation
of privacy
Is privacy risk like
monetary risk?
17

- ESA Jerusalem
18 Implicit privacy valuations

1. Monetary lotteries:
1. 75 ECU and 30% chance that you will lose 50
of those ECUS.
2. 1 + 50
= 75 30% 50
2. This gives us (50), an index of risk

aversion (if the loss is 50).
3. We get r for different values of the loss,

infer from this the function ().
19 Privacy valuations
Then we look at certainty equivalent for
privacy lotteries.
Indifferent between CE and 75 ECU and 30% that
your personal information will be revealed to
others.
1 + ( ) = 75 30% so we obtain
1+ )
implicit = (75
if v() is linear.
30%
This allows us to ascertain how much of the

fear of privacy loss is due to general risk
aversion and what is due to high value for
privacy.
20 Perception of privacy risks

But this assumes that people reason the
same way for privacy risks as for risks
involving money!
So we examine two variations (order of
elicitation, unavoidable risk to privacy) to
(start) to see if privacy risk is evaluated in
a different way from monetary risk.
21 Privacy and control

We tested for an all-or-nothing effect.
Does knowing that ones privacy is already

at risk lead one to stop valuing it?
Treatment 1: Can avoid privacy risk entirely.
Treatment 2: Told that with 20% probability
they will have to reveal private information to
others, whatever the decision.
No difference between treatments.

22 Privacy and order of elicitation

We test for the effect of framing (order of
elicitation).
We find that eliciting monetary risk
attitudes first made people less sensitive
to privacy risk.
This indicates that being asked to think in
terms of money first leads people to pay
less attention to non-monetary outcomes
(privacy).
23 Conclusion
Novel privacy elicitation method inspired
by experimental literature on risk
attitudes.
Positive relation between privacy and risk
valuation, while other indexes of privacy
attitudes play a limited role.
Losing control on privacy disclosure does
not lead people to lose interest in
protecting their privacy.

Privacy Protection and Risk Attitudes

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Privacy Protection and Risk Attitudes

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Privacy Protection

and Risk Attitudes

ESA Jerusalem 2016

Surveys with questionnaire on attitudes and

Privacy and risk attitudes - Frik & Gaudeul - ESA Jerusalem

Sunday, 4 Tammuz, 5776

Stated preferences differ from observed

Sunday, 4 Tammuz, 5776

3. Test of the relation between privacy and

We compare those with the willingness to protect

Sunday, 4 Tammuz, 5776

Privacy and risk attitudes - Frik & Gaudeul

Sunday, 4 Tammuz, 5776

6 Generation of privacy concern

This means there is no way to answer in a way

Sunday, 4 Tammuz, 5776

7 Information revealed to others

Subjects stands in front of others in the

Privacy and risk attitudes - Frik & Gaudeul - ESA Jerusalem

Sunday, 4 Tammuz, 5776

8 Information revealed to others

Privacy and risk attitudes - Frik & Gaudeul - ESA Jerusalem

Sunday, 4 Tammuz, 5776

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

always 30% chance to

Note how we allow

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

You get 55 ECU, but with probability 30 %

Order of elicitation (monetary, privacy).

Trust in others, other people known, trust in

Sunday, 4 Tammuz, 5776

Privacy and risk attitudes - Frik & Gaudeul

Sunday, 4 Tammuz, 5776

University of Trento, Italy

Privacy and risk attitudes - Frik & Gaudeul - ESA Jerusalem

Sunday, 4 Tammuz, 5776

Index of aversion to privacy disclosure.

Warning: This is not a value for private information.

Privacy and risk attitudes - Frik & Gaudeul - ESA Jerusalem

Sunday, 4 Tammuz, 5776

2. Higher index if privacy fundamentalists,

Sunday, 4 Tammuz, 5776

16 Implicit privacy values

2. Correcting privacy values with risk attitudes,

WTA 16 average, all positive.