Perception Games and Privacy

TL;DR

This paper models how privacy concerns influence strategic decision-making using signaling games, revealing complexities in pooling, misrepresentation, and inefficiency that challenge common intuitions.

Contribution

It introduces a signaling game framework to analyze the impact of privacy concerns on strategic behavior and information revelation.

Findings

Privacy concerns can lead to pooling and misrepresentation.

Standard intuitions may misjudge the effects of privacy on efficiency.

The model highlights nuanced implications of privacy in strategic settings.

Abstract

Players (people, firms, states, etc.) have privacy concerns that may affect their choice of actions in strategic settings. We use a variant of signaling games to model this effect and study its relation to pooling behavior, misrepresentation of information, and inefficiency. We discuss these issues and show that common intuitions may lead to inaccurate conclusions about the implications of privacy concerns.