Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189297 
Authors: 
Year of Publication: 
2002
Series/Report no.: 
Queen's Economics Department Working Paper No. 1010
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
This paper examines why economies endow agents with a degree of personal privacy, even when (a) "no privacy" is ex-post (Pareto) efficient, and (b) a costless monitoring technology exists. A government can provide more of a public good only by identifying "valuable" agents from a population of n. All agents report their type to the government --- truthfully or not --- unsure if they, or others, are being observed. When n is small, it is shown that increasing monitoring effectiveness can actually lead to ex-post inefficiency. Political equilibria are also characterized, where agents vote to constrain the government's monitoring effectivenes but not its ability to levy penalties or rewards. When n is large, all such equilibria are efficient; however, a utilitarian government may not implement taxes to reward honest reporting, nor impose penalties to punish it, even when these options ensure full revelation. Legislating a "right to privacy", by contrast, is always inefficient.
Subjects: 
Privacy
Public Goods
Tagging
JEL: 
D82
H41
Document Type: 
Working Paper

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