A Prospect Theory of Privacy

Privacy law has languished for decades while the other information law doctrines have flourished. This paradox can be explained by the relative weight assigned respectively to moral argument versus economic argument. Privacy law is unique in that it continues to be steered foremost by moral intuition. What qualifies as a “violation” of privacy is predicated largely on the moral reprehensibility of the act in question. By stark contrast, the intellectual property regimes have long since converted to being led primarily by economic considerations, and only secondarily by noneconomic factors. That distinction is counterproductive and nonsensical. Personal data is an informational good like any other. The same economic justifications for intellectual “property” can be extended to intellectual “privacy”— nonexclusivity harms the incentives to generate new information that can further the progress of social knowledge. Where moral rhetoric has failed to advance robust recognition of privacy interests, economic reasoning may prove more effective. In particular, this Essay offers Edmund Kitch’s prospect theory as an important counterweight to prior economic critiques of privacy, which have frowned on restraints on alienation of information. Prospect theory shows that the social value of recognizing exclusive claims is not just to shield information that already exists, but also to shield deeper investigations of that information to unearth further information that would not be otherwise discoverable