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New paper on privacy and social network formation

Caterina Giannetti and I released a new paper on privacy and social network formation, based on an experiment that we led at the Max Planck Institute to study the impact of private information revelation on the selections of partners when forming a network.

Privacy, Trust and Social Network Formation
Alexia Gaudeul and Caterina Giannetti
CEGE Discussion Paper Nr. 269
http://dx.doi.org/10.2139/ssrn.2697523

Our experiment is inspired by the debate about the conflict between protecting privacy online and protecting Internet users from anonymous attacks (toxic disinhibition). At the moment, there has been no systematic study to evaluate how revealing personally identifiable private information can work as an endogenous force in the process of network formation.

We show that being able to (but not forced) to reveal one’s identity, thereby increasing participants’ privacy costs, may be used to mitigate the exploitative behavior of some network members, and promote the establishment of fewer but more valuable links between people.

Participants in our experiment choose to reveal their name in order to build trust with other participants and are thereby able to form bilateral links with them. Beneficial exchange then takes place within their self-selected network of “friends”. Overall, letting subjects choose whether to reveal their name allows some sorting between contributors (who generally reveal their names) and non-contributors (who tend not to reveal their name). This generates higher level of trust among participants, as measured by higher rates of contributions.

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