Abstract. We consider private information a commodity, of value to both the information holder and the information seeker. Hence, a customer can be enticed to trade his/her private information with a business in exchange for compensation. In this paper we propose to apply utility theory to allow each participant to express the value they place on each private datum and, separately, on combinations of data. The PrivacyPact protocol transmits messages that are comprised of possible exchanges. Each participant is prevented from making offers that necessarily have lower utility for the other partner than previous ones. The protocol is complete in that if an exchange exists that is acceptable to both, it will be found as long as neither partner exits the negotiation early. While the space of possible offers grows exponentially on the number of negotiable items, experimentation with simple strategies indicates that negotiations can converge relatively quickly.

Private information about individuals that engage in e-commerce business transactions is of economic value to businesses for market analysis and for identifying possible future partners. For various reasons, maintaining the privacy of that information is important to these individuals, including avoiding unwelcome communication, spam, from those businesses or their associates. In this paper we advocate a negotiation strategy to be used by an individual deciding whether or not to divulge information to a specific electronic business for a specific purpose, such as achieving preferential status with a service provider or a discounted price from a vendor. The strategy makes use of explanation techniques for expert systems that answer "how", "what if" and "why not" questions. We assume that the business practices of the provider or vendor are available as explicit business rules, including the eligibility criteria for preferential status and price discounts. Our prototype allows the user to obtain a proof that the information to be given is both necessary and sufficient for achieving the eligibility / discount-answering "how" eligibility is established. The communication protocol with the prototype also includes "what if" dialogues allowing a user to assess the difficulty and benefits of achieving eligibility, and "why not" dialogues for identifying missing eligibility criteria. The prototype is built upon the emerging standard Web Services architecture. Thus the prototype allows a business to expose its business practices, educating its customers, so it can provide the most appropriate service for a given individual. The prototype engages the customer to assess the benefit of exposing some private information to the business. Through the "what if" interface, the customer can be aware of the complete set of information that will be necessary to achieve the desired eligibility before any private information is actually transmitted. We offer an example where a user is negotiating a car price discount.