Personal data disclosure and data breaches: the customer's viewpoint

摘要

Every time the customer (individual or company) has to release personalinformation to its service provider (e.g., an online store or a cloud computingprovider), it faces a trade-off between the benefits gained (enhanced orcheaper services) and the risks it incurs (identity theft and fraudulent uses).The amount of personal information released is the major decision variable inthat trade-off problem, and has a proxy in the maximum loss the customer mayincur. We find the conditions for a unique optimal solution to exist for thatproblem as that maximizing the customer's surplus. We also show that theoptimal amount of personal information is influenced most by the immediatebenefits the customer gets, i.e., the price and the quantity of service offeredby the service provider, rather than by maximum loss it may incur. Easyspenders take larger risks with respect to low-spenders, but an increase inprice drives customers towards a more careful risk-taking attitude anyway. Amajor role is also played by the privacy level, which the service provideremploys to regulate the benefits released to the customers. We also provide aclosed form solution for the limit case of a perfectly secure provider, showingthat the results do not differ significantly from those obtained in the generalcase. The trade-off analysis may be employed by the customer to determine itslevel of exposure in the relationship with its service provider.