The Effect of Online Privacy Information on Purchasing Behavior: An Experimental Study

Abstract

While most people claim to be very concerned about their privacy, they do not consistently take actions to protect it. Web retailers detail their information practices in their privacy policies, but most of the time this information remains invisible to consumers. This paper reports on research undertaken to determine whether a more prominent display of privacy information will cause consumers to incorporate privacy considerations into their online purchasing decisions. We designed an experiment in which a shopping search engine interface, Privacy Finder, clearly displays privacy policy information provided by retailers in a machinereadable format. Privacy Finder annotates search results with a "privacy icon" and a "privacy report." The privacy icon provides a privacy rating for the retailer on a five-point scale. The privacy report summarizes information contained in traditional privacy policies in a short, concise format. Our research shows that providing accessible privacy information reduces the information asymmetry gap between merchants and consumers. This reduction tends to lead consumers to purchase from online retailers who better protect their privacy. Additionally, our study indicates that once privacy information is made more salient, some consumers are willing to pay a premium to purchase from more privacy protective websites.

The Hidden Cost of Accommodating Crowdfunder Privacy Preferences: A Randomized Field Experiment

“…A large number of studies in recent years support this logic. Scholars have noted the growing prevalence of privacy concerns amongst consumers (Goldfarb and Tucker 2012), and have demonstrated the positive effects of privacy assurances, policies and seals on user information sharing and product purchase (Hui et al 2007;Tsai et al 2011). At the same time, a number of studies have demonstrated the value of social recognition and reputational gains as drivers of user contributions to online communities (Wasko and Faraj 2005;Zhang and Zhu 2011).…”

Can Transparency Enhancing Tools Support Patient’s Accessing Electronic Health Records?

“…Nevertheless, other research shows that people appreciate that a website is concerned about their privacy. People buy more often and more expensive goods from web sites that publicly declare that they care about protecting the privacy of their customers (e.g., see [29]). Besides, it has been proved that usable privacy policies foment trust [30].…”

Technology Mergers and Acquisitions in the Presence of an Installed Base: A Strategic Analysis

“…In such transactions, customer information generally is one of the transferred business assets." An ostensible reason for firms to acquire customer records is to predict consumer preferences or offer customized services (Garfinkel et al, 2007;Li et al, 2011;Tsai et al, 2011). Our analysis suggests they may use such records simply for static price discrimination (Taylor, 2004;Fudenberg and Villas-Boas, 2006).…”