Privacy or Utility in Data Collection? A Contract Theoretic Approach

With the growing popularity of data mining, privacy has become an issue of growing importance. Privacy can be seen as a special type of goods, in a sense that it can be traded by the owner for incentives. In this paper, we consider a private data collecting scenario where a data collector buys data from multiple data owners and employs anonymization techniques to protect data owners´ privacy. Anonymization causes a decline of data utility; therefore, the data owner can only sell his data at a lower price if his privacy is better protected. Can one pursue higher data utility while maintaining acceptable privacy? How to balance the trade-off between privacy protection and data utility is an important question for big data. Considering that different data owners treat privacy differently, and their privacy preferences are unknown to the collector, we propose a contract theoretic approach for data collector to deal with the trade-off. By designing an optimal contract, the collector can make rational decisions on how to pay the data owners, and more importantly, how he should protect the owners´ privacy. We show that when the collector requires a large amount of data, he should ask data owners who care privacy less to provide as much as possible data. We also find that whenever the collector requires higher utility of data or the data becomes less profitable, the collector should provide a stronger protection of the owners´ privacy. Performance of the proposed contract is evaluated by both numerical simulations and real data experiments.