An Empirical Approach to Understanding Privacy Valuation

Wathieu, Luc; Friedman, Allan

doi:10.2139/ssrn.982593

Cited by 33 publications

(27 citation statements)

References 22 publications

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“…Subjects clearly made use of this information, as the choice patterns revealed by the manual pilot study experiments described above are transparently rational, with Internet users attracted by positive payoffs but willing to trade off prospective expected benefits to reduce risk exposures. As noted in Wathieu and Friedman (2005), "more information is needed about consumer preferences beyond 'people want privacy,' and our pretests support the notion that a great deal more can be learned about those preferences in an experimental setting. As noted by Walthieu and Friedman, our preliminary tests clearly supported the conclusion that "people do behave somewhat rationally when considering realistic privacy situations."…”

Section: Improving On Reasonable Pilot Study Resultssupporting

confidence: 65%

An experimental economics approach toward quantifying online privacy choices

2006

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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. Such limitations are the motivation for this work. 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 efforts at applying the techniques of experimental economics to provide a foundation for (a) estimating the values that consumers place on privacy and various forms of security (encryption, HIPAA, etc.) and for (b) quantifying user responses to changes in the Internet environment. The contribution of this study is a better understanding of individual decision-making in the context of benefits and costs of making private information available to Internet sites. Preliminary results from a series of pilot studies are consistent with optimizing behaviors, indicating that continued application of experimental economics techniques in the quantification of Internet user actions in privacy/security space will be illuminating. Our results show that Internet users place great value on security measures, both regulatory and technical, that make identity theft much less likely. Our Web-based experiments indicate that privacy-and security-enhancing protections are likely to be subject to moral hazard responses, as participants in our online experiments became more aggressive in their Internet usage with greater protection in place.

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Section: Improving On Reasonable Pilot Study Resultssupporting

confidence: 65%

An experimental economics approach toward quantifying online privacy choices

2006

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“…Both Turow et al (2009) and Wathieu and Friedman (2009) document that customer appreciation of the informativeness of targeted ads is tempered by privacy concerns. When privacy concerns are more salient, consumers are more likely to have a prevention focus (Van Noort, Kerkhof, and Fennis 2008), in which they are more sensitive to the absence or presence of negative outcomes, instead of a promotion focus in which they are more sensitive to the absence or presence of positive outcomes.…”

Section: Introductionmentioning

confidence: 99%

Online Display Advertising: Targeting and Obtrusiveness

Goldfarb

Tucker²

2011

Marketing Science

687

349

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We use data from a large-scale field experiment to explore what influences the effectiveness of online advertising. We find that matching an ad to website content and increasing an ad's obtrusiveness independently increase purchase intent. However, in combination these two strategies are ineffective. Ads that match both website content and are obtrusive do worse at increasing purchase intent than ads that do only one or the other. This failure appears to be related to privacy concerns: The negative effect of combining targeting with obtrusiveness is strongest for people who refuse to give their income, and for categories where privacy matters most. Our results suggest a possible explanation for the growing bifurcation in internet advertising between highly targeted plain text ads and more visually striking but less targeted ads.Keywords: E-commerce, Privacy, Advertising, Targeting * Avi Goldfarb is Associate Professor of Marketing, Rotman School of Management, University of Toronto, 105 St George St., Toronto,. Email: agoldfarb@rotman.utoronto.ca. Catherine Tucker is Assistant Professor of Marketing, MIT Sloan School of Business, 1 Amherst St., E40-167, Cambridge, MA. Tel. 617-252-1499. Email: cetucker@mit.edu. We thank Pankaj Aggarwal and seminar participants at UT-Dallas for helpful comments. Financial support from the Google and WPP Marketing Research Awards Program is gratefully acknowledged. 1 IntroductionCustomers actively avoid looking at online banner ads (Dreze and Hussherr 2003).Response rates to banner ads have fallen dramatically over time (Hollis 2005). In reaction to this, online advertising on websites has developed along two strikingly distinct paths.On the one hand, the $11.2 billion 1 online display advertising market has evolved beyond traditional banner ads to include many visual and audio features that make ads more obtrusive and harder to ignore. On the other hand, Google has developed a highly profitable non-search display advertising division (called AdSense) that generates an estimated $6 billion in revenues by displaying plain content-targeted text ads: 76% of US internet users are estimated to have been exposed to AdSense ads. 2 This paper explores how well these divergent strategies work for online advertising, and how consumer perceptions of intrusiveness and privacy influence their success or lack of it, both independently and in combination.We examine the effectiveness of these strategies using data from a large randomized field experiment on 2,892 distinct web advertising campaigns that were placed on different websites.On average, we have data on 852 survey-takers for each campaign. Of these, half were randomly exposed to the ad, and half were not exposed to the ad but did visit the website on which the ad appeared. These campaigns advertised a large variety of distinct products, and were run on many different websites.The advertisers in our data used two core improvements on standard banner ad campaigns to attract their audience.(1) Some web campaigns matched the product...

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“…High levels of personalization in advertising may become too intrusive (van Doorn and Hoekstra 2013;Yu and Cude 2009), especially for highly privacy-concerned individuals. Privacy concerns may therefore diminish SNS users' response to personalized advertising messages, as research has demonstrated that the tolerance of personalized communications might be reduced by privacy concerns (Wathieu and Friedman 2009).…”

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confidence: 99%

Like or dislike? Adolescents’ responses to personalized social network site advertising

Walrave

Poels

Antheunis

et al. 2016

Journal of Marketing Communications

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Increasingly, personal data posted by users of social network sites (SNSs) can be used to personalize advertising. The present study investigates how adolescents respond to personalized ads in terms of attitude toward the ad, brand engagement and intention to forward, and whether privacy concerns moderate their responses. According to pretest results, a medium level of personalization was expected to be optimal in terms of advertising effectiveness. A within-subjects experiment involving 40 participants aged 14-18 years was performed. Three conditions of personalized advertising were designed with, respectively, low, medium, and high levels of personalization. The study found that the highest personalization condition generated the most positive response and that privacy concerns did not moderate the effects of personalization. The privacy paradox is discussed as an alternative explanation, along with other implications of the results.

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An Empirical Approach to Understanding Privacy Valuation

Cited by 33 publications

References 22 publications

An experimental economics approach toward quantifying online privacy choices

An experimental economics approach toward quantifying online privacy choices

Online Display Advertising: Targeting and Obtrusiveness

Like or dislike? Adolescents’ responses to personalized social network site advertising

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