Week 9: Modeling Data Policies

DSAN 5450: Data Ethics and Policy
Spring 2026, Georgetown University

Jeff Jacobs

jj1088@georgetown.edu

Wednesday, March 18, 2026

Schedule

Today’s Planned Schedule:

	Start	End	Topic
Lecture	3:30pm	3:45pm	Final Projects →
	3:45pm	4:15pm	Extended Recap →
	4:15pm	4:50pm	Contractual Power →
Break!	4:50pm	5:10pm
	5:10pm	6:00pm	The Power of Mechanism Design →

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(Normative) Issues with Notice and Consent

The Crux of the Normative Issues

Does Reading = Understanding?

• Does reading \(\implies\) understanding implications / contingencies / ambiguities?
• NLP could (and should!) be helpful (“making privacy policies machine readable […] would help users match privacy preferences against policies offered by web services”), but mostly just reveals how bad the problem is:

Figure 15 from Wagner (2023). “Obfuscatory words” are words like acceptable, significant, mainly, or predominantly, interpretated at the discretion of companies rather than users (see next slide!)

The Fundamental Problem of Contracts

• Just as we can’t observe two simultaneous worlds \(W_{X = 0}\) and \(W_{X = 1}\) which differ only in the value of \(X\),
• We can’t foresee all possible contingencies that need to be included in a contract
  • (We can try, though! Hence use of obfuscatory words to minimize liability)
• So, when a situation arises which is not covered by a clause in the contract, what happens? What principle determines whose interpretation wins out?
  • (Hint: It is actually literally my legal middle name…)

…POWER!

• Examples from employment contracts:
• In a private, cooperatively-owned, democratic firm, outcome determined by conversation, majority vote, unanimity, etc.
  • These technically exist in the US! Employing 2,380 workers, \(\frac{2380}{127509000} \approx 0.0019\%\) of US workforce
• Otherwise, in a non-unionized private firm (94% of total), the outcome is determined by organizational hierarchy
  • This is the case for \(\frac{125000000}{127509000} \approx 98.03\%\) of US workforce

Descriptive and Normative Implications

• Who has power w.r.t. incompleteness of contracts?
• Who ought to have power w.r.t. incompleteness of contracts?
• Residual rights of control…

Hart’s Nobel Prize Speech

Complete contracts are contracts where everything that can ever happen is written into the contract. Actual contracts aren’t like this, as lawyers know. They’re poorly worded, ambiguous, leave out important things. They’re incomplete.

A critical question that arises with an incomplete contract is, who has the right to decide about the missing things? We called this right the residual control or decision right. The question is, who has it?

Further thought led us to the idea that this is what ownership is. The owner of an asset has the right to decide how the asset is used where the use is not contractually specified (Hart 2017)

Understanding Rights \(\leftrightarrow\) Fighting for Rights

• “Hohfeldian” framework (Hohfeld 1913)
• A right \(r_i\) granted to person \(i\) \(\implies\) A duty/obligation imposed on everyone in the world besides \(i\) (to respect \(r_i\))
• A duty or obligation \(d_i\) imposed on a person \(i\) \(\implies\) A right granted to everyone in the world besides \(i\) (to… be a potential beneficiary of \(d_i\))
• \(\implies\) rough measures of relative power in a contract:

\[ \frac{\text{rights}_i}{\text{rights}_j} = \frac{\text{obligations}_j}{\text{rights}_j} = \frac{\text{rights}_i}{\text{obligations}_j} = \frac{\text{obligations}_j}{\text{obligations}_i} \]

Descriptive vs. Normative

• Much of Part 1 has been adjusting to weirdness of normative reasoning

• Descriptive reasoning looks like [Rules of math \(\implies \theta^* = 2.5\)], but [rules of math] part isn’t mentioned bc extraneous

  • (Even if it was mentioned, intersubjective agreement not so hard, very few people fighting wars over “we should denote repeated addition with \(\otimes\) not \(\times\)!”)

• Normative reasoning looks like [Antecedent A \(\implies\) Answer 1 but Antecedent B \(\implies\) Answer 2], and people do fight wars over A vs. B (implicitly or explicitly)

• Part 2: Rapid cycling back and forth between normative and descriptive!

• One new aspect: “Descriptive Ethics” (How do people act, not how should people act) \(\leadsto\) Study of Power

  [What is] right, as the world goes, is only in question between equals in power; otherwise, the strong do as they please and the weak suffer what they must. (Thucydides 2013, chap. 411 BC)

Recap 1: Privacy Policies Take a Long Time to Read!

Recap 2: Reading Privacy Policies \(\neq\) Understanding Privacy Policies!

• Reading vs. understanding implications / contingencies / ambiguities…
• NLP could (and should!) be helpful (“making privacy policies machine readable […] would help users match privacy preferences against policies offered by web services”), but mostly just reveals how bad the problem is:

Figure 15 from Wagner (2023). “Obfuscatory words” are words like acceptable, significant, mainly, or predominantly, interpretated at the discretion of companies rather than users (see next slide!)

Conclusion

Real Conclusion(?)

Wars with One Side

It would be ideal except for the Porto Ricans [sic]. They are beyond doubt the dirtiest, laziest, most degenerate and thievish race of men ever inhabiting this sphere. It makes you sick to inhabit the same island with them. They are even lower than Italians. What the island needs is not public health work but a tidal wave or something to totally exterminate the population. It might then be livable. I have done my best to further the process of extermination by killing off 8 and transplanting cancer into several more. (Cornelius Rhoads)

By 1930, the police had files on at least 135,000 individuals (about 3 percent of the island) suspected of favoring independence. (Source)

Wars with One Side?

Georgetown Law School Center on Privacy and Technology, American Dragnet: Data-Driven Deportation in the 21st Century

Contracts Through a Game-Theoretic Lens: Mechanism Design

The Fundamental Problem of Contracts

• Just as we can’t observe two simultaneous worlds \(W_{X = 0}\) and \(W_{X = 1}\) which differ only in the value of \(X\),
• We can’t foresee all possible contingencies that need to be included in a contract
  • (Hence use of obfuscatory words to minimize liability)
• So, when a situation arises which is not covered by a clause in the contract, what happens? What principle determines whose interpretation wins out?
  • (Hint: It is actually literally my legal middle name…)

…POWER!

• Examples from employment contracts (tooting own horn):
• In a private, cooperatively-owned, democratic firm, outcome determined by conversation, majority vote, unanimity, etc.
  • These technically exist in the US! Employing 2,380 workers, \(\frac{2380}{127509000} \approx 0.0019\%\) of US workforce
• Otherwise, in a non-unionized private firm (94% of total), the outcome is determined by organizational hierarchy
  • This is the case for \(\frac{125000000}{127509000} \approx 98.03\%\) of US workforce

Descriptive and Normative Considerations

The combined effect of incomplete contracts and conflicts of interest is that the determination of outcomes depends on who exercises power in the transaction.

Power is generally exercised by those who hold the residual rights of control, meaning the right to determine what is not specified contractually (Bowles 2009)

• [Step 1: Empirically measurable given antecedents] Who has power w.r.t. a given incomplete contract?
• [Step 2: Up to you and your ethical axioms; e.g., efficiency] Who ought to have power w.r.t. incomplete contracts?

Working Definition of Power

Defining (Dyadic) Power (Bowles and Gintis 1992, 326–27)

For agent \(A\) to have power over agent \(B\) it is sufficient that, by imposing or threatening to impose sanctions on \(B\), \(A\) is capable of affecting \(B\)’s actions in ways that further \(A\)’s interests, while \(B\) lacks this capacity with respect to \(A\).

Mechanism Design

• Prisoner’s Dilemma
• Assurance Game
• Invisible Hand Game
• Mechanism Design = Creating incentives to push existing game from one form to another!
• Second Price Auctions…

Prisoners’ Dilemma

		\(B\)
		Fish 6h			Fish 8h
\(A\)	Fish 6h	\(1, \,\)	\(1\)		\(0,\)	\(1.2\)
	Fish 8h	\(1.2, \,\)	\(0\)		\(0.4,\)	\(0.4\)

Assurance Game

Palanpur, Gujarat, India

The farmers do not doubt that earlier planting would give them larger harvests, but no one, the farmer explained, is willing to be the first to plant, as the seeds on any lone plot would be quickly eaten by birds…

[What if you all organized to plant on the same day, to reap rewards of earlier planting while minimizing bird losses (dividing by \(N\) instead of \(1\))?]

“If we knew how to do that”, he said, looking up from his hoe at me, “we would not be poor.” (Bowles 2009)

Assurance Game in Normal Form

		\(B\)
		Early	Late
\(A\)	Early	\(4, 4\)	\(0, 3\)
	Late	\(3, 0\)	\(2, 2\)

Invisible Hand Game (Normal Form)

		\(B\)
		Corn	Taro
\(A\)	Corn	\(2, 4\)	\(4, 3\)
	Taro	\(5, 5\)	\(3, 2\)

References

Bowles, Samuel. 2009. Microeconomics: Behavior, Institutions, and Evolution. Princeton University Press. https://books.google.com?id=HAiMDU4qv0IC.

Bowles, Samuel, and Herbert Gintis. 1992. “Power and Wealth in a Competitive Capitalist Economy.” Philosophy & Public Affairs 21 (4): 324–53. https://www.jstor.org/stable/2265369.

Hart, Oliver. 2017. “Incomplete Contracts and Control.” American Economic Review 107 (7): 1731–52. https://doi.org/10.1257/aer.107.7.1731.

Hohfeld, Wesley Newcomb. 1913. “Some Fundamental Legal Conceptions as Applied in Judicial Reasoning.” Yale Law Journal 23. https://heinonline.org/HOL/Page?handle=hein.journals/ylr23&id=24&div=&collection=.

Thucydides. 2013. The War of the Peloponnesians and the Athenians. Cambridge University Press. https://books.google.com?id=dSYnCTf3rSAC.

Wagner, Isabel. 2023. “Privacy Policies Across the Ages: Content of Privacy Policies 1996–2021.” ACM Transactions on Privacy and Security 26 (3): 32:1–32. https://doi.org/10.1145/3590152.