An Analysis of Privacy-Related Strategic Choices of Buyers and Sellers in E-commerce Transactions

E-commerce transactions, in addition to the exchange of goods and services for payment, often entail an indirect transaction, where personal data are exchanged for better services or lower prices. This paper analyses buyer´s and seller´s privacy-related strategic choices in e-commerce transactions through game theory. We demonstrate how game theory can explain why buyers mistrust internet privacy policies and relevant technologies (e.g. P3P) and sellers hesitate to invest in data protection.