Towards a Utility Theory of Privacy and Information Sharing: The Introduction of Hyper-Hyperbolic Discounting

1. Introduction

Until recently, there was no stringently utility theory of information sharing and privacy (Puaschunder, 2018). We still lack a coherent decision science framework about when people choose to share information and when they rather want to stay silent for the sake of privacy. In the digital age, to study the trade-off between information sharing and privacy has leveraged into unprecedented importance. Social media revolutionized human communication around the globe. As never before in the history of humankind, information about individuals can be stored and put in context over time and logically placed within society thanks to unprecedented data conservation and computational powers. The big data era, however, also opened gates to unprecedentedly reap benefits from information sharing and big data generation (Puaschunder, 2017). The so-called nudgital society was recently introduced, shedding light onto the undescribed hidden social class division between social media users and social media providers, who can benefit from the information shared by social media users (Puaschunder, 2017). Social media users share private information in their wish to interact with friends and communicate to public. The social media big data holder can then reap surplus value from the information shared by selling it to marketers, who can draw inferences about consumer choices. The big data can also be used for governance control purposes, for instance border protection and tax compliance control.

Drawing from the economic foundations of utility theory, Puaschunder (2018) introduced the first application of utility theory to a preference-values predicament between communication and privacy in the new media era. Behavioral economics insights were advanced in shedding novel light on the conflict between the humane wish to communicate now versus combined information held by unknown big data compilers in the future. An exponential loss of privacy and hyper-hyperbolic risks in the future for the information sharer was introduced as behavioral economic decision-making fallibilities. For the overconfident information sharer, it remains largely unforeseeable what the sum of the individual information sharing tranches can lead to over time and what information its Gestalt holds for those who have big data insights over time, which can also be analyzed in relation to the general population. Governance gains a critical stance on new media use for guiding on public concerns regarding privacy and information sharing in the digital age (Puaschunder, 2017). In the emerging social sciences literature on privacy and information sharing in the age of social media, the dignity of privacy and utility of information sharing predicament has not been addressed under the wing of corporate governance yet.

Corporate governance accounts for the system of rules, practices and processes by which a firm is directed and controlled. Corporate governance involves balancing the interests of many stakeholders and future-oriented addresses conflict potentials in order to breed harmony and efficiency throughout a firm. To this day, the privacy and information sharing predicament has gained limited attention by corporate governance specialists. Dignity of privacy and utility of information sharing are hence argued to be integrated into corporate governance techniques in the domains of risk management and sustainability considerations.

The article is structured as follows: An introduction of the theory of utility and communication and information sharing is followed by an outline of the impetus of the digital big data age on privacy. The utility theory of information sharing, and privacy will be theoretically introduced. Hyperbolic decision making fallibility will become the basis of argumentations around hyper-hyperbolic discounting – the novel argument that information sharing in tranches may lead to an underestimation of the privacy infringements when these bits of information can be put together over time and are compared to big data in order to infer about the individual in relation to the general population (Puaschunder & Schwarz, 2012). The outlined privacy and information sharing predicament in the digital big data age will be grounded in a bigger societal trade-off between dignity and utility, which are therefore then argued to be integrated into corporate risk management and sustainability means (Puaschunder, 2015). Challenging contemporary behavioral insights theory aims at fostering a more informed, self-determined and protected digital society in the wish to uphold e-ethics in the 21^st century big data social media era.