Final answer:
Individuals setting personal limits that are respected by others is known as boundary setting, which relates to privacy and autonomy as critical elements of civil liberty.
Step-by-step explanation:
When individuals intentionally allow one another the right to psychological distance and physical privacy, they are engaging in boundary setting. Boundary setting is a fundamental aspect of interpersonal interactions which involves the establishment of personal limits and rules that others are expected to observe. It is closely tied to the broader concepts of privacy and autonomy, which are essential to civil liberty and the right to personal decision-making without unwarranted government intrusion. Cultivating privacy allowance and respect for personal boundaries is key to ensuring the right to be let alone, a core component of the right to privacy as echoed by legal definitions and human rights norms.