Unpacking Privacy: Willingness to pay to protect personal data

Journal of Economic Literature, 2016

This article summarizes and draws connections among diverse streams of theoretical and empirical research on the economics of privacy. We focus on the economic value and consequences of protecting and disclosing personal information, and on consumers' understanding and decisions regarding the trade-offs associated with the privacy and the sharing of personal data. We highlight how the economic analysis of privacy evolved over time, as advancements in information technology raised increasingly nuanced and complex issues. We find and highlight three themes that connect diverse insights from the literature. First, characterizing a single unifying economic theory of privacy is hard, because privacy issues of economic relevance arise in widely diverse contexts. Second, there are theoretical and empirical situations where the protection of privacy can both enhance and detract from individual and societal welfare. Third, in digital economies, consumers' ability to make informed decisions about their privacy is severely hindered because consumers are often in a position of imperfect or asymmetric information regarding when their data is collected, for what purposes, and with what consequences. We conclude the article by highlighting some of the ongoing issues in the privacy debate of interest to economists.

IEEE Security and Privacy Magazine, 2005

In several experimental auctions, participants put a dollar value on private information before revealing it to a group. An analysis of results show that a trait's desirability in relation to the group played a key role in the amount people demanded to publicize private information. Because people can easily obtain, aggregate, and disperse personal data electronically, privacy is a central

The importance of personal privacy to Internet users has been extensively researched using a variety of survey techniques. The limitations of survey research are well-known and exist in part because there are no positive or negative consequences to responses provided by survey participants. Experimental economics is widely accepted by economists and others as an investigative technique that can provide measures of economic choice-making that are substantially more accurate than those provided by surveys. This paper describes our preliminary efforts at applying the techniques of experimental economics to provide a foundation for estimating the values that consumers place on privacy and various forms of security, such as encryption and HIPAA. In the activities described, experiment participants are graduate and undergraduate students currently seeking jobs. Preliminary results from two pilot experiments suggest that a complete set of experimental measures of choice-making will provide...

2011 44th Hawaii International Conference on System Sciences, 2011

We explore consumer trade-offs between better performance through tailoring of online services to their individual needs and greater privacy as a result of reduced disclosure of personal information. We show that individuals have different willingness to accept loss of privacy that is a function of (1) the individual and his/ her preferences, because the variation in demands for privacy is not uniform across individuals, (2) the service Domain, because individuals demand more privacy in some Domains than they do in others and (3) these differences themselves differ among consumers as well.

Economics & Sociology

Protection of privacy in the information age is a growing challenge. Corporations and other institutions collect data and utilize them for various purposes, not all of which may be in favour of individuals. Yet still little is known of how individuals perceive the value of privacy and what is the individuals' awareness of costs and benefits associated with data sharing. This article presents the experimental research on factors determining privacy behavior of consumers. We provide evidence, that the need of privacy protection depends on gender and is affected by priming. On the other hand, nor the type of purchased good nor the decision-making method had the significant impact in our study on willingness to disclose private data.

Kennedy School of Government, …, 2005

The importance of personal privacy to Internet users has been extensively researched using a variety of survey techniques. The limitations of survey research are well-known and exist in part because there are no positive or negative consequences to responses provided by survey participants. Experimental economics is widely accepted by economists and others as an investigative technique that can provide measures of economic choice-making that are substantially more accurate than those provided by surveys. This paper describes our preliminary efforts at applying the techniques of experimental economics to provide a foundation for estimating the values that consumers place on privacy and various forms of security, such as encryption and HIPAA. In the activities described, experiment participants are graduate and undergraduate students currently seeking jobs. Preliminary results from two pilot experiments suggest that a complete set of experimental measures of choice-making will provide valuable quantification of behavior in Internet privacy/security space. These results also show that online job seekers place great value on security measures, both legislative and technical, that make identity theft much less likely.

Journal of the Academy of Marketing Science, 2002

The World Wide Web has significantly reduced the costs of obtaining information about individuals, resulting in a widespread perception by consumers that their privacy is being eroded. The conventional wisdom among the technological cognoscenti seems to be that privacy will continue to erode, until it essentially disappears. The authors use a simple economic model to explore this conventional wisdom, under the assumption that there is no government intervention and privacy is left to free-market forces. They find support for the assertion that, under those conditions, the amount of privacy will decline over time and that privacy will be increasingly expensive to maintain. The authors conclude that a market for privacy will emerge, enabling customers to purchase a certain degree of privacy, no matter how easy it becomes for companies to obtain information, but the overall amount of privacy and privacy-based customer utility will continue to erode. The advance of civilization is nothing but an exercise in the limiting of privacy.-Isaac Asimov Civilization is the progress toward a society of privacy.-Ayn Rand Science fiction writer Isaac Asimov and political novelist Ayn Rand take opposite sides with respect to the eventual outcome with respect to privacy. It is clearly the case,

Digital Policy, Regulation and Governance, 2017

Purpose: The viability of online anonymity is questioned in today’s online environment where many technologies enable tracking and identification of individuals. By highlighting the shortcomings of government, industry and consumers in protecting anonymity, it is clear that a new perspective for ensuring anonymity is needed. Where current stakeholders have failed to protect anonymity, some proponents argue economic models exist for valuation of anonymity. By placing monetary value on anonymity through Rawls’ concept of primary goods, it is possible to create a marketplace for anonymity, therefore allowing users full control of how their personal data is used. Such a marketplace offers users the possibility to engage with companies and other entities to sell and auction personal data. Importantly, participation in a marketplace does not sacrifice one’s anonymity since there are different levels of anonymity in online systems. Design/methodology/approach: The paper utilizes a conceptual framework based on the abstractions of anonymity and data valuation. Findings: The manuscript constructs a conceptual foundation for exploring the development and deployment of a personal data marketplace. By suggesting features allowing individuals’ control of their personal data, and properly establishing monetary valuation of one’s personal data, it is argued that individuals will take a more proactive management of personal data. Research limitations/implications: Because the paper is conceptual in nature, it would be beneficial to explore the feasibility of establishing a personal data marketplace. Originality/value: An overview of available services and products offering increased anonymity is explored, in turn, illustrating the beginnings of a market response for anonymity as a valuable good. By placing monetary value on individuals’ anonymity, it is reasoned that individuals will more consciously protect their anonymity in ways where legislation and other practices (i.e., privacy policies, marketing opt-out) have failed.

Journal of Consumer Psychology, 2020

We review different streams of social science literature on privacy with the goal of understanding consumer privacy decision making and deriving implications for policy. We focus on psychological and economic factors influencing both consumers’ desire and consumers’ ability to protect their privacy, either through individual action or the implementation of regulations applying to firms. Contrary to depictions of online sharing behaviors as careless, we show how consumers fundamentally care about online privacy, and present evidence of numerous actions they take to protect it. However, we also document how prohibitively difficult it is to attain desired, or even desirable, levels of privacy through individual action alone. The remaining instrument for privacy protection is policy intervention. However, again for both psychological and economic reasons, the collective impetus for adequate intervention is often countervailed by powerful interests that oppose it.

In many types of information systems, users face an implicit tradeoff between disclosing personal information and receiving benefits, such as discounts by an electronic commerce service that requires users to divulge some personal information. While these benefits are relatively measurable, the value of privacy involved in disclosing the information is much less tangible, making it hard to design and evaluate information systems that manage personal information. Meanwhile, existing methods to assess and measure the value of privacy, such as self-reported questionnaires, are notoriously unrelated of real eworld behavior. To overcome this obstacle, we propose a methodology called VOPE (Value of Privacy Estimator), which relies on behavioral economics' Prospect Theory (Kahneman & Tversky, 1979) and valuates people's privacy preferences in information disclosure scenarios. VOPE is based on an iterative and responsive methodology in which users take or leave a transaction that includes a component of information disclosure. To evaluate the method, we conduct an empirical experiment (n ¼ 195), estimating people's privacy valuations in electronic commerce transactions. We report on the convergence of estimations and validate our results by comparing the values to theoretical projections of existing results (Tsai, Egelman, Cranor, & Acquisti, 2011), and to another independent experiment that required participants to rank the sensitivity of information disclosure transactions. Finally, we discuss how information systems designers and regulators can use VOPE to create and to oversee systems that balance privacy and utility.