Study on monetising privacy. An economic model for pricing personal information

Do some individuals value their privacy enough to pay a mark-up to an online service provider who protects their information better? How is this related to personalisation of services? This study analyses the monetisation of privacy. ‘Monetizing privacy’ refers to a consumer’s decision of disclosure or non-disclosure of personal data in relation to a purchase transaction. The main goal of this report is to enable a better understanding of the interaction of personalisation, privacy concerns and competition between online service providers. Consumers benefit from personalisation of products on the one hand, but might be locked in to services on the other. Moreover, personalisation also bears a privacy risk, i.e. that data may be compromised once disclosed to a service provider. Privacy is a human right; thinking about the economics of privacy does not change this basic fact. The authors of this report consider an economic analysis of privacy as complementary to the legal analysis as it improves our understanding of human decision-making with respect to personal data.