Photo by
Kobi Richter/TPS on 9 November, 2015
Game Theory Reveals Trade-Offs in Data Privacy Models, Say Researchers
By
Pesach Benson
• 14 January, 2025
Jerusalem, 14 January, 2025 (TPS-IL) -- Allowing platforms like Google and Waze to control user data collection and commercialization can enhance societal welfare, according to an Israeli study whose findings add a twist to ongoing debates over data privacy.
The research was led by Prof. Yaron Yehezkel of the Coller School of Management at Tel Aviv University, in collaboration with Prof. Sarit Markovich of Northwestern University in Illinois. Using mathematical tools from game theory, the team modeled the behavior of users and platforms to explore who benefits and under what circumstances. The findings were recently published in the peer-reviewed Journal of Economics & Management Strategy.
“Our research examined platforms that collect and commercialize user data,” said Yehezkel. “For instance, Google collects data from search activity, and Spotify gathers insights from listening habits. These platforms can trade this data—for example, selling it to advertisers for targeted ads. We aimed to determine who should have the right to control this process, how societal benefits are distributed, and the scenarios under which these benefits occur.”
The study contrasted American and European frameworks for managing user data. The American model grants platforms full discretion over data collection and usage. When users agree to a platform’s terms, they relinquish control over their data. If they object, their only recourse is to stop using the service.
The European model, embodied by the General Data Protection Regulation (GDPR), ensures that users retain control of their data and can choose how it is used while still accessing the platform. This system often includes consent mechanisms, such as pop-ups asking for user approval.
In Israel, the American model is predominant, granting platforms broad authority over data.
The researchers identified a distinction between data’s economic value to the platform’s owners and the social value for the platform’s users. For example, Waze uses real-time driving data not only for commercial purposes but also to improve traffic flow by guiding drivers away from congested areas. Similarly, Spotify refines its music recommendations based on user preferences.
“A platform that collects data from me can provide better services to others,” Yehezkel explained. “For instance, if Waze cannot collect my trip data, its ability to optimize routes for other drivers diminishes, potentially leading to longer traffic jams. This shows how shared data can create broader societal benefits.”
The study concluded that the optimal approach depends on the type of data and its societal value. When data has low social value, the European model excels by prioritizing user privacy without significant impacts on overall platform efficiency. Conversely, when data offers high social value and meaningfully enhances services, the American model proves advantageous, particularly when the data is less sensitive.
“Data has a dual nature,” Prof. Yehezkel noted. “While it can be misused when sold to third parties, it can also drive societal improvements when responsibly managed.”
Identifying situations where user data collection is advantageous could lead to tailored data privacy laws, refined consent systems while providing guidance for collaborative efforts between governments and tech companies.
