On the value of private information

Abstract

As individuals increasingly take advantage of on-line services, the value of the private information they possess emerges as a problem of fundamental concern. We believe that the principle underlying privacy should be simple: Individuals are entitled to control the dissemination of private information, disclosing it as part of a transaction only when they are fairly compensated. We show how this principle can be made precise in several diverse settings-- in the use of marketing surveys by a vendor designing a product; and in the design of collaborative filtering and recommendation systems, where we seek to quantify the value of each user's participation. Our approach draws on the analysis of coalitional games, making use of the core and Shapley value of such games as fair allocation principles.