Essays on Privacy and Trust

Abstract

The dissertation studies how privacy and trust are shaped by digital technologies: how individuals value privacy over personal data, how AI alters trust and disclosure, and how decentralised blockchains can sustainably replace trusted intermediaries. Chapter 1 argues that the 'privacy paradox' --- that individuals claim to value privacy, yet readily disclose personal data --- arises because privacy is treated as monolithic, when it is multidimensional. I develop a framework that distinguishes voluntary disclosure from involuntary data diffusion, reconciling the paradox by showing that disclosures reflect contextual trade-offs. Using a discrete choice experiment, I provide estimates of privacy valuations across both institutional and social contexts. I find that privacy has substantial value when exposure results in harmful consequences, such as socially revealing data reaching close contacts. I also document an AI privacy puzzle: individuals are less concerned about privacy from AI assistants than from the firms that develop them. Chapter 2 examines this AI privacy puzzle. Using a survey experiment, I replicate the finding from Chapter 1 specifically for firms in the AI industry, highlighting the privacy gap that arises despite the clear product--firm relationship. An information treatment that explicitly links AI assistants to their firms increases concern about both, but does not significantly reduce this gap. Instead, the gap also reflects the anthropomorphic features of AI assistants, aversion to the commercial nature of firms, and the trust and perceived control consumers attach to each. However, when respondents evaluate real-world AI assistant--firm pairs, brand familiarity is the strongest predictor of where privacy concern is attributed. Chapter 3 considers decentralised trust in blockchain systems, in which consensus mechanisms replace trusted intermediaries. I propose a 'proof of quiet quitting' consensus mechanism that reduces the excessive energy consumption of proof of work while retaining the decentralisation that proof of stake can compromise. By introducing a participation lottery with unrestricted entry and an endogenous cutoff, the mechanism separates maximum effort capacity from the probability of winning, inducing participants to exert no more than the minimum effort required in equilibrium.