Research exposes data markets' inefficiencies and proposes solutions to protect users' privacy
While it is argued that data-driven products and services ultimately benefit users because of better customization, many are not convinced that sharing their information is a good deal
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As the use of online platforms grows, there is an increasing amount of data from individuals being collected by companies, a process that is set to expand exponentially with advances in artificial intelligence and machine learning.
While it is argued that data-driven products and services ultimately benefit users because of better customization, many are not convinced that sharing their information is a good deal. A 2019 survey by Pew Research Center, for example, showed that 81 percent of U.S. adults believe that the potential risks they face because of data collection by companies outweigh the benefits. Sixty-two percent believe it is not possible to go through daily life without companies collecting data about them.
“If you talk with machine learning and artificial intelligence experts, they will say that better services and recommendations will always compensate for the privacy loss of users,” says Ali Makhdoumi, an associate professor of decision sciences at Duke University’s Fuqua School of Business. His research, however, suggests otherwise.
Makhdoumi describes his area of expertise, market design, as an interdisciplinary field somewhere in the intersection of operations research, computer science, economics, and applied mathematics. “There's a lot of modeling involved, where we try to define the mechanics of the real world with math. And, once we have modeled the system, we try to design it optimally.”
Most of his recent research focuses on the data market. “Within data market, I'm mostly interested in the issues of privacy, especially the potential harms of big data and artificial intelligence, and how we can redesign the systems to get around them,” Makhdoumi says. That was the motivation behind the work “Too Much Data: Prices and Inefficiencies in Data Markets,” which was accepted for publication by the American Economic Journal: Microeconomics.
[This article has been reproduced with permission from Duke University's Fuqua School of Business. This piece originally appeared on Duke Fuqua Insights]