Privacy Policy in Online Social Network with Targeted Advertising Business

In an online social network, users exhibit personal information to enjoy social interaction. The social network provider (SNP) exploits users' information for revenue generation through targeted advertising. The SNP can present ads to proper users efficiently. Therefore, an advertiser is more willing to pay for targeted advertising. However, the over-exploitation of users' information would invade users' privacy, which would negatively impact users' social activeness. Motivated by this, we study the optimal privacy policy of the SNP with targeted advertising business. We characterize the privacy policy in terms of the fraction of users' information that the provider should exploit, and formulate the interactions among users, advertiser, and SNP as a three-stage Stackelberg game. By carefully leveraging supermodularity property, we reveal from the equilibrium analysis that higher information exploitation will discourage users from exhibiting information, lowering the overall amount of exploited information and harming advertising revenue. We further characterize the optimal privacy policy based on the connection between users' information levels and privacy policy. Numerical results reveal some useful insights that the optimal policy can well balance the users' trade-off between social benefit and privacy loss.