For his doctoral thesis, Price of Privacy, Dr. Lennart Kraft received the Dr.-Dietmar-Harting Prize of the Erich-Gutenberg-Arbeitsgemeinschaft e.V. for outstanding achievements in business administration on the theory of enterprise at the award ceremony on November 26, 2022, at the Excelsior Hotel in Cologne.
In his dissertation, supported by an ERC Advanced Grant and supervised by Prof. Dr. Bernd Skiera and Prof. Dr. Klaus Miller, Dr. Lennart Kraft investigates innovative methods for protecting privacy on the Internet with regard to their economic consequences. While privacy laws such as the European General Data Protection Regulation (GDPR) require legal foundations from companies to protect consumer privacy, he examines “Differential Privacy” and “Data Tax” as alternative approaches.
Differential privacy describes a concept in which firms add a random error to their data. This transformation prevents companies from identifying individuals. However, valid conclusions about groups of individuals are still possible. The Data Tax is a modified digital tax that companies must pay when processing data. It thus incentivizes firms to process only data whose economic value exceeds the tax rate.
For both approaches, Dr. Lennart Kraft concludes that the “price of privacy” is substantial and significantly reduces company profits. Ultimately, this profit reduction also affects consumers, as companies in a world with increased privacy would need alternative financing options. As a result, they could, for example, charge more for their content.
Lennart Kraft works as a research assistant at Prof. Skiera’s chair of Electronic Commerce in the Faculty of Economics and Business at Goethe University Frankfurt.