Towards balancing privacy and efficiency: A principal-agent model of data-centric business

Abstract

Personal data has emerged as a crucial asset of the digital economy. However, unregulated markets for personal data severely threaten consumers’ privacy. Based upon a commodity-centric notion of privacy, this paper takes a principal-agent perspective on data-centric business. Specifically, this paper presents an economic model of the privacy problem in data-centric business, in that drawing from contract theory. Building upon a critical analysis of the model, this paper analyzes how regulatory and technological instruments could balance efficiency of markets for personal data and data-subjects’ right to informational self-determination.