How much money would you give up to keep your medical history and financial circumstances out of the public eye? For people involved in personal injury lawsuits, the answer could be thousands of dollars. New research suggests that concerns about privacy can significantly influence legal negotiations, with claimants accepting smaller settlements rather than risk exposing sensitive personal information in court.
Published in Management Science, the study examined a legal reform in Israel that allowed plaintiffs in personal injury cases to remain anonymous. Previously, individuals who rejected insurance settlements and pursued their claims in court risked having details about their injuries, medical conditions and earnings disclosed in publicly accessible judgments. The reform removed that threat, giving researchers a rare opportunity to measure the financial value people place on privacy.
Analysing claims data from Israel’s five largest insurance companies between 2011 and 2020, researchers discovered that settlement payments increased by 12% to 17% following the introduction of anonymity protections. Since nearly all claims were settled outside court, the findings suggest that insurers began offering higher compensation once claimants no longer had to choose between protecting their privacy and pursuing larger payouts.
The research was conducted by Prof. Ehud Guttel, Prof. Ilan Kremer, Guy Lakan and Prof. Sarit Weisburd of the Hebrew University of Jerusalem, alongside Prof. Liran Einav of Stanford University. The international team spent five years investigating how the possibility of public disclosure affected settlement decisions and negotiating power.
“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 financial impact was especially noticeable among working-age adults, whose disclosed medical conditions or earnings could potentially affect future employment opportunities. Larger increases in compensation also appeared in lengthy, complex cases and those involving highly ranked law firms, suggesting that privacy becomes particularly valuable when the potential consequences of disclosure are greater.
The findings also challenge the so-called “privacy paradox”, which suggests that although people claim to value privacy, they are often unwilling to pay to protect it. Unlike surveys or laboratory experiments, this research examined actual financial decisions in legal disputes, providing evidence that individuals are prepared to sacrifice substantial sums to keep personal information confidential.
The study has since inspired Incognito Justice, a €3.5 million European Union-funded research project led by Prof. Guttel. Bringing together nine academic and civil society partners, including institutions in Germany, France and the UK, the initiative will investigate how anonymous court judgments influence judicial writing, media coverage, public trust and the legitimacy of legal decisions. As court records become increasingly searchable online, the project aims to explore how legal systems can protect personal privacy without undermining transparency and open justice.
More information: Liran Einav et al, Does Privacy Matter? Evidence from a Legal Reform, Management Science. DOI: 10.1287/mnsc.2025.00107
Journal information: Management Science Provided by The Hebrew University of Jerusalem