Does Imperfect Data Privacy Stop People from Collecting Personal Health Data?

Privacy regulations can affect the willingness to collect personal health data that may be disclosed to insurers. Perfect privacy cannot always be guaranteed. Consequently, people may refrain from collecting personal health data. This paper provides a theoretical and experimental analysis of the importance of privacy regulations for information acquisition and disclosure behavior. We contrast three institutional settings in a simple game of persuasion: Disclosure Duty of collected data, Perfect Privacy and Imperfect Privacy. Under Perfect Privacy there exists a unique proper equilibrium with complete information acquisition. For Disclosure Duty no information acquisition is predicted. Imperfect Privacy can result in multiple equilibria. Our laboratory experiment confirms the qualitative differences on information acquisition for Perfect Privacy and Disclosure Duty. Behavior under Imperfect Privacy turns out to be very similar to Perfect Privacy: Imperfect Privacy does not stop people from collecting personal information. We discuss possible reasons for the observed behavior. JEL Classification: C90, D80, D82, I10