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Efficiency versus privacy

Increasingly, many kinds of decisions will be made by analyzing alternatives using databases. This will include personal decisions as well as political-economic decisions. Man as a decision maker has limited cognitive skills. This limit has been called bounded rationality by the Nobel laureate H. Simon. Using decision aids humans can make better decisions in all aspects of life. To make computer aided decisions requires relevant databases. This raises a fundamental conflict between privacy and property rights versus the data needed for making better decisions. Computer based decisions make the information structure or what information should be available for each type of decision a fundamental policy issue. For example, credit data bases enable stores to determine a consumers credit rating quickly at low cost. This is the basis for the credit oriented consumer market. Without such data bases it would be much more difficult to obtain auto and home loans.


norman@eco.utexas.edu
Thu Jun 8 16:37:44 CDT 1995