• Journal of Digital Convergence
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• v.10 no.9
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• pp.27-37
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• 2012

Internet privacy has become a significant issue in recent years in light of the sharp increase in internet-based social and economic activities. The technology which collects, processes and disseminates personal information is improving significantly and the demand for personal information is rising given its inherent value in regard to targeted marketing and customized services. The high value placed on personal information has turned it into a commodity with economic worth which can be transacted in the marketplace. Therefore, it is strongly required to approach the issue of privacy from economic perspective in addition to the prevailing approaches. This article analyzes the behaviors of consumers and firms in gathering personal information, and shielding it from unauthorized access, using a game theory framework in which players strive to do their best under the given conditions. The analysis shows that there exist no market forces which require all firms to respect consumer privacy, and that government intervention in the form of a nudging incentive for information sharing and/or strict regulation is necessary.