Information Frictions and Heterogeneity in Valuations of Personal Data

Information Systems and Operations Management (ISOM) Department 

Speaker : Dr. Avinash COLLIS

from  McCombs School of Business at the University of Texas

Abstract:

We investigate how consumer valuations of personal data are affected by real-world information interventions. Proposals to compensate users for the information they disclose to online services have been advanced in both research and policy circles. These proposals are hampered by information frictions that limit consumers' ability to assess the value of their own data. We use an incentive-compatible mechanism to capture consumers’ willingness to share their social media data for monetary compensation, and estimate distributions of valuations of social media data before and after an information treatment. We find evidence of significant dispersion and heterogeneity in valuations before the information intervention, with women and Black and low-income individuals reporting systematically lower valuations than other groups. After an information intervention, we detect significant revisions in valuations, concentrated among individuals with low initial valuations. Dispersion and heterogeneity in valuations across these demographic groups decrease but persist after the information intervention. The findings suggest that strategies aimed at reducing information asymmetries in markets for personal data may increase consumer welfare. At the same time, the findings highlight how consumer valuations of personal data are only in part influenced by market information.