One of the standard claims about privacy is that people say they value their privacy but behave as if they don’t value it. The standard example involves people trading away private information for something of relatively little value. This argument is often put forth to rebut the notion that privacy is an important policy value. Alternatively, it is posed as a “what could they be thinking” puzzle.
I used to be impressed by this argument, but lately I have come to doubt its power. Let me explain why.
Suppose you offer to buy a piece of information about me, such as my location at this moment. I’ll accept the offer if the payment you offer me is more than the harm I would experience due to disclosing the information. What matters here is the marginal harm, defined as amount of privacy-goodness I would have if I withheld the information, minus the amount I would have if I disclosed it.
The key word here is marginal. If I assume that my life would be utterly private, unless I gave this one piece of information to you, then I might require a high price from you. But if I assume that I have very little privacy to start with, then selling this one piece of information to you makes little difference, and I might as well sell it cheaply. Indeed, the more I assume that my privacy is lost no matter what I do, the lower a price I’ll demand from you. In the limit, where I expect you can get the information for free elsewhere even if I withhold if from you, I’ll be willing to sell you the information for a penny.
Viewed this way, the price I charge you tells you at least as much about how well I think my privacy is protected, as it does about how badly I want to keep my location private. So the answer to “what could they be thinking” is “they could be thinking they have no privacy in the first place”.
And in case you’re wondering: At this moment, I’m sitting in my office at Princeton.