Keep Them out of It! How Information Externalities Affect the Willingness to Sell Personal Data Online

When individuals provide their personal data online, they often disregard that this allows third parties to learn about others, too. Our large-scale online experiment reveals that individuals are less willing to provide personal data when sharing can compromise others’ privacy, entailing personalized price discrimination. Compared to a benchmark without data compromise, individuals’ willingness to sell data decreases when others’ data is compromised
with 50% or 100% probability. By applying two well-studied interventions – peer effects and a social norm focus – we explore ways to mitigate excessive data sharing, laying the ground for policy design. While peer effects, on average, increase individuals’ willingness to provide personal data, making people reflect on the appropriate behavior appears to be a promising social nudge to reduce excessive data sharing.