Image versus Information: Changing Societal Norms and Optimal Privacy
- (pp. 116-64)
Abstract
We analyze the costs and benefits of using social image to foster desirable behaviors. Each agent acts based on his intrinsic motivation, private assessment of the public good, and reputational concern for appearing prosocial. A Principal sets the general degree of privacy, observes the social outcome, and implements a policy: investment, subsidy, law, etc. Individual visibility reduces free riding but makes aggregate behavior ("descriptive norm") less informative about societal preferences ("prescriptive norm"). We derive the level of privacy (and material incentives) that optimally trades off social enforcement and learning, and we characterize its variations with the economy's stochastic and informational structure.Citation
Ali, S. Nageeb, and Roland Bénabou. 2020. "Image versus Information: Changing Societal Norms and Optimal Privacy." American Economic Journal: Microeconomics, 12 (3): 116-64. DOI: 10.1257/mic.20180052Additional Materials
JEL Classification
- D82 Asymmetric and Private Information; Mechanism Design
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- Z13 Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification
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