Location Privacy: Privacy, Efficiency and Recourse through a Prohibitive Contract

In certain circumstances an individual may not be in control of their private location information and thus vulnerable to a privacy violation. In this paper, we ensure location privacy through the establishment of a prohibitive contract in a situation where an individual wishes to minimize privacy loss and a service provider aims to maximize profits. Given the possible strategies we show that a privacy equilibrium can be found. This equilibrium, expressed in the form of a prohibitive contract, is established with the intention of preventing a possible privacy violation. Should within the constraints of the prohibitive contract, a violation occur, a suitable and efficient outcome for both parties presents itself. We further investigate how such violations may affect a user-centric location privacy system. Emphasis is placed on the economic and contract aspects of the parties’ relationship, rather than specific technical detail of location privacy. Utilizing the utilitarian paradigm approach, we evaluate the overall efficiency of the prohibitive contracts which we show postulates convergence towards an overall balanced system.