People are willing to forgo significant sums of money to prevent sensitive medical or financial information from becoming public in legal proceedings, according to a new Management Science study.
The study challenges the idea of a “privacy paradox,” under which people express concern about privacy but appear unwilling to make financial sacrifices to protect it. By examining actual decisions in a high-stakes legal setting, rather than relying on surveys or laboratory experiments, the research demonstrates that privacy can have substantial and measurable economic value.
The study was conducted by Prof. Ehud Guttel of the Hebrew University of Jerusalem (HU) Faculty of Law; Prof. Ilan Kremer of the HU Department of Economics and the University of Warwick; Prof. Sarit Weisburd and Guy Lakan of the HU Business School, and Prof. Liran Einav of Stanford University and the National Bureau of Economic Research.
“Our findings show that privacy is not merely an abstract value,” said Prof. Guttel. “When people believe that information about their health or financial circumstances could become publicly accessible, it can directly affect the decisions they make and the compensation they are willing to accept. The study shows that privacy protections can meaningfully change the balance of power in legal negotiations.”
The researchers examined a legal reform introduced in Israel that granted anonymity to plaintiffs in personal injury lawsuits. Prior to the reform, individuals who rejected an insurance settlement and pursued their claims in court faced the possibility that judgments would publicly disclose private details about their injuries, medical condition and earnings.
Using data from Israel’s five largest insurance companies covering claims between 2011 and 2020, the researchers found that payments for personal injury claims increased by 12% to 17% after the privacy protections were introduced.
Before anonymity was guaranteed, claimants appear to have accepted lower settlements to keep sensitive medical and financial information out of searchable court records. The researchers interpret the difference as an implicit “privacy cost” that individuals had previously been willing to bear. As nearly all of the claims were resolved through settlements, the findings suggest that insurers began offering higher amounts once claimants no longer faced the threat of public exposure.
The effect was particularly pronounced among working-age adults, for whom the disclosure of injuries or income could affect future professional opportunities. Larger increases were also found in longer and more complex cases and in claims handled by highly ranked law firms, suggesting that privacy may carry greater value when the information involved is especially sensitive or the personal consequences are more severe.
The work also became the starting point for a broader research agenda led by Prof. Guttel. Building on the questions raised by the study, he developed Incognito Justice, a research project examining the wider effects of anonymous court judgments on legal systems.
The project has received €3.5 million in funding under the European Union’s Horizon Europe program and will bring together nine academic and civil society partners from across Europe, including the University of Bonn (Germany), École Polytechnique (France) and Oxford University (UK). Coordinated by the Hebrew University under Prof. Guttel’s leadership, it will investigate how anonymization affects judicial writing, citation practices, media coverage, public trust and the legitimacy of court decisions.
While the original study focused on how anonymity changes financial negotiations in personal injury claims, Incognito Justice will examine the wider transformation taking place as courts seek to balance the traditional principle of open justice with growing concerns about privacy in an era of easily searchable online judgments.
Research Paper
Einav, L., Guttel, E., Kremer, I., Lakan, G., & Weisburd, S. (2026). “Does Privacy Matter? Evidence from a Legal Reform.” Management Science.
DOI: https://doi.org/10.1287/mnsc.2025.00107
Authors:
Liran Einav2,3, Ehud Guttel1, Ilan Kremer1,4, Guy Lakan1, Sarit Weisburd1,5
Affiliations:
The Hebrew University of Jerusalem
Stanford University
NBER
University of Warwick
CEPR
About the Hebrew University of Jerusalem
Israel's premier institution of higher learning and a beacon for visionary minds who challenge convention and shape the future, the Hebrew University of Jerusalem (HU) has pursued excellence in research, education, and innovation for over a century. Founded by luminaries like Albert Einstein, who entrusted his intellectual legacy to the University, HU is dedicated to advancing knowledge, cultivating leadership, and promoting diversity. Home to over 25,000 students from 90 countries, the Hebrew University drives much of Israel’s civilian scientific research and the commercialization of technologies through Yissum, its tech transfer company. Faculty and alumni of the University have earned ten Nobel Prizes, two Turing Awards, and a Fields Medal. For more information about Hebrew University's academic programs, research, and achievements, please visit http://new.huji.ac.il/en.
About American Friends of the Hebrew University
American Friends of the Hebrew University (AFHU) is a national, not-for-profit organization based in the United States. AFHU is headquartered in New York and has seven regional offices working in close partnership with the Hebrew University of Jerusalem. AFHU provides supporters, Hebrew University alumni, and the public with stimulating programs and events, and organizes missions to Israel. For the past century, the organization’s activities have supported scholarly and scientific achievement at HU, created scholarships, funded new facilities, and assisted the University’s efforts to recruit outstanding new faculty. For more information, please visit http://www.afhu.org.
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