This article briefly explores several scenarios in which economic actors compete and cooperate in order to capture the value in personal information. The focus then shifts to one particular scenario: the ongoing interaction between the United States and the European Union in attempting to construct data protection regimes that serve the philosophies and citizens of each jurisdiction as well as provide a strategic economic advantage. A game theoretic model is presented to explain the course of dealings between the two actors, including both unilateral and bilateral actions. Part I ends with an exploration of opportunities for seizing competitive advantage, and for fostering cooperative mutual advantage, through government action. Several likely equilibrium states are posited, and a single ultimate equilibrium is predicted. Part I explores the literature on commodification and negotiability of information in order to explain the contextual nature of modern privacy and, further, introduces a number of the contexts and actors among which information interactions take place. Then, Part II focuses on a single context and a single pair of actors, the United States and European Union. This part describes their divergent philosophies regarding data protection, the conflicting legislative results that have flowed from those philosophies and the attempts at “solving” the privacy conflict between these two actors via negotiation. Part III expresses the U.S.-E.U. privacy conflict as an extensive form game, explains the history of interaction between the actors in terms of such game and assesses the current negotiated “solution.” Finally, the article concludes with a consideration of the traditional game theoretic underpinnings of the alternative outcomes and assesses the likely stability of the equilibrium achieved.
Horace E. Anderson, Jr., The Privacy Gambit: Toward A Game Theoretic Approach to International Data Protection, 9 Vand. J. Ent. & Tech. L. 1 (2006), http://digitalcommons.pace.edu/lawfaculty/396/.