Opt-in Regime Research Articles

Default options: a powerful behavioral tool to increase COVID-19 contact tracing app acceptance in Latin America?

AbstractGiven the rates of transmission of COVID-19, relying only on manual contact tracing might be infeasible to control the epidemic without sustained costly lockdowns or rapid vaccination efforts. In the first study of its kind in Latin America, we find through a phone survey of a nationally representative sample of ten countries that an opt-out regime (automatic installation) increases self-reported intention to accept a contact tracing app with exposure notification by 22 percentage points compared to an opt-in regime (voluntary installation). This effect is triple the size and of opposite sign of the effect found in Europe and the United States, potentially due to lower concerns regarding privacy and lower levels of interpersonal trust. We see that an opt-out regime is more effective in increasing willingness to accept for those who do not trust the government or do not use their smartphones for financial transactions. The local severity of the pandemic does not affect our results, but feeling personally at risk increases intent to accept such apps in general. These results can shed light on the use of default options not only for contact tracing apps but in public health overall in the context of a pandemic in Latin America.

Price discrimination and product quality under opt-in privacy regulation

We study how an opt-in regime of privacy regulation, which limits the scope for online price discrimination, affects product quality and consumer surplus. When consumers decide to share personal data, they benefit from the complementarity between information and quality, but they pay personalized prices instead of a uniform price. We find that, if the complementarity is strong enough, then product quality is higher with than without the opt-in regime. Privacy regulation may have conflicting effects on consumers with different attitudes towards privacy, and an increase in quality is necessary to improve total consumer surplus. Interestingly, these results hold both under monopoly and imperfect product market competition. We thus recommend that privacy protection measures be grounded in the study of the relation between personal information and product quality.

Comments on Developing the Administration’s Approach to Consumer Privacy

Although the US does not have a single, omnibus, privacy regulation, this does not mean that the US does not have “privacy law.” In the US, there already exist generally applicable laws at both the federal and state level that provide a wide scope of protection for individuals, including consumer protection laws that apply to companies’ data use and security practices, as well as those that have been developed in common law (property, contract, and tort) and criminal codes. In addition, there are specific regulations pertaining to certain kinds of information, such as medical records, personal information collected online from children, credit reporting, as well as the use of data in a manner that might lead to certain kinds of illegal discrimination. Getting regulation right is always difficult, but it is all the more so when confronting evolving technology, inconsistent and varied consumer demand, and intertwined economic effects — all conditions that confront online privacy regulation. Given this complexity, and the limits of our knowledge regarding consumer preferences and business conduct in this area, ICLE’s evaluation suggests that the proper method of regulating privacy is, for now at least, the course that the Federal Trade Commission (FTC) has historically taken: case-by-case examination of actual privacy harms, without ex ante regulations, coupled with narrow legislation targeted at problematic uses of personal information. Many (if not most) services on the Internet are offered on the basis that user data can, within certain limits, be used by a firm to enhance its services and support its business model, thereby generating benefits to users. To varying degrees (and with varying degrees of granularity), services offer consumers the opportunity to opt-out of this consent to the use of their data, although in some cases the only way effectively to opt-out is to refrain from using a service at all. Critics of the US approach to privacy sometimes advocate for a move to an opt-in regime (as is the case in the GDPR). But the problem is that “‘[o]pt-in’ provides no greater privacy protection than ‘opt-out’ but imposes significantly higher costs with dramatically different legal and economic implications.” In staunching the flow of data, opt-in regimes impose both direct and indirect costs on the economy and on consumers, reducing the value of certain products and services not only to the individual who does not opt-in, but to the broader network as a whole. Not surprisingly, these effects fall disproportionately on the relatively poor and the less technology-literate. U.S. privacy regulators have generally evidenced admirable restraint and assessed the relevant tradeoffs, recognizing that the authorized collection and use of consumer information by data companies confers enormous benefits, even as it entails some risks. Indeed, the overwhelming conclusion of decades of intense scrutiny is that the application of ex ante privacy principles across industries is a fraught exercise as each firm faces a different set of consumer expectations about its provision of innovative services, including privacy protections. This does not mean that privacy regulation should never be debated, nor that a more prescriptive regime should never be considered. But any such efforts must begin with the collective wisdom of the agencies, scholars, and policy makers that have been operating in this space for decades, and with a deep understanding of the business realities and consumer welfare effects involved.

Who is a passive saver under opt-in and auto-enrollment?

Defaults have been shown to have a powerful effect on retirement saving behavior yet there is limited research on who is most affected by defaults and whether this varies based on features of the choice environment. Using administrative data on employer-sponsored retirement accounts linked to survey data, we estimate the relationship between retirement saving choices and individual characteristics – long-term discounting, present bias, financial literacy, and exponential-growth bias – under two distinct choice environments: an opt-in regime and an auto-enrollment regime. Consistent with our conceptual model, we find that the determinants of following the default and contribution behavior are regime-specific. Under the opt-in regime, financial literacy plays an important role in predicting total contributions, active saving choices, and maxing out contributions in the tax-preferred account. In contrast, under the auto-enrollment regime, present bias is the most significant behavioral predictor of contribution behavior. A causal interpretation of the estimates suggests that auto-enrollment increases saving primarily among those with low financial literacy.

The South African Class Action Mechanism: Comparing the Opt-In Regime to the Opt-Out Regime

In Mukaddam v Pioneer Food (Pty) Ltd 2013 2 SA 254 (SCA), Nugent JA stated that, once the class is confined to claimants who choose positively to advance their claims and are required to come forward for that purpose, he can see no reason why they are not capable of doing so in their own names through joinder – they do not need a representative to do so on their behalf. The members who choose to opt in to the class action will thus be identifiable. If that is the case then, according Nugent JA, joinder may be the appropriate procedural device. A problem evidenced by this approach is accordingly that, by suggesting that joinder is the appropriate procedural device where all the claimants are identifiable, rather than a class action, the court essentially attacked the viability of the opt-in regime of class action litigation.
 The preferential treatment afforded by our courts to the opt-out class action regime is further reinforced by the finding of Nugent JA that the opt-in class action regime can be utilised only in exceptional circumstances. As exceptional circumstances had not been proved, he found that a class action was not the most appropriate way to pursue the claims. He accordingly suggested that joinder was a viable option to pursue the claims.
 The opt-in class action regime requires individual class members to take positive steps to participate in the class action. In other words, class members are required to come forward and opt into the class action, failing which they will not be bound by or benefit from the outcome of the litigation. Support for the opt-in regime is essentially premised on the belief that individuals who are unaware of the litigation should not be bound by its outcome. The opt-out class action regime, on the other hand, automatically binds members of the class to the class action and the outcome of the litigation unless the individual class members take steps to opt out of the class action. Support for the opt-out regime is essentially based on the view that the opting-in requirement could undermine one of the primary purposes of class action litigation, which is to facilitate access to justice.
 The Constitutional Court in Mukaddam v Pioneer Foods (Pty) Ltd 2013 5 SA 89 (CC) held that Nugent JA was wrong to find that an applicant in an opt-in class action is required to show exceptional circumstances. However, the court did not provide reasons for its disagreement. The issue relating to exceptional circumstances in opt-in class actions was dealt with in two sentences. The Constitutional Court also failed to deal with the nature and status of the opt-in class action compared with opt-out class actions in South African law.
 The note will accordingly consider when, if at all, it is appropriate to use the opt-in class action regime compared to the opt-out class action regime.
 

Can Formalities Save the Public Domain? Reconsidering Formalities for the 2010s

Many of the recent calls to reintroduce formalities in copyright, have focused on its potential for restoring and enhancing the public domain. Formalities advocates claim that shifting back to an opt-in regime, where copyright protection is contingent upon satisfying certain formalities, would increase the number of works in which copyright is not affirmatively claimed. This position overlooks, however, the way our creative landscape has been shaken by the digital revolution. Digital technology has transformed the way we create, share, and enjoy cultural works, bringing users to the forefront of creative processes and facilitating new types of collaborative production. The rise of online intermediaries and the growing role of online platforms are also shaping the way we generate, share, and use copyrighted materials. These transformations are not only changing the economics of the cultural environment, they are also affecting political rights, social structures, access to knowledge, and freedom. Paying more attention to the potential effect of formalities on user-generated content (“UGC”), collaborative production, and the role of mega-platforms in implementing a formalities regime might help us imagine the possibilities and risks in the digital ecosystem and design the legal tools that are necessary to align the law with the digital era.The Article revisits some of the arguments supporting formalities as a vehicle for promoting the public domain in the 2010s, and offers some insights on the policy implications.

EU privacy and electronic communications regulations

This paper explores the background to the Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011; the major changes that have been made to the law in this area; the opt-in regime and exceptions to the general rule as well as the practical issues involved in the implementation of the regulations in the UK.

For your eyes only? A ‘Do Not Track’ proposal

The Internet has become an indispensable part of Americans’ everyday lives. At the same time, its ease of data collection and storage has put the notion of personal privacy in grave danger. The FTC is finally gearing up to face this danger and opened discussions on how Do Not Track regulations should operate. This article first explores the landscape of the current tracking mechanisms and surveys what Americans actually think of these practices and how much they understand about their legal protections. Second, it proposes a possible solution, partially grounded in a comparison with the popular and proven Do Not Call regulations. Specifically, I parse the problem into three main types of behavior – first-party tracking, third-party tracking, and the selling/sharing of collected data – and suggest a different legal rule for each. Selling/sharing of data poses the greatest threat to personal privacy and therefore, should be governed by an opt-in regime. Third-party tracking can be placed under a browser level opt-out control. This proposal leaves first-party tracking as is, though with some caveats for the direction of potential future regulations. Finally, the article considers a cost-benefit analysis of imposing limits on tracking and offers three responses to the economic-based criticisms of such limits. One, that the choice between free Internet and personal privacy is a false one. Two, that customization and not personalization is a much better answer for both consumer and industry. And three, that there is enough evidence to suggest that the purported benefits are specious at best, and consumers deserve the ability to dispute the cost-benefit balance currently struck by the industry at their expense.