Relative Privacy Valuations Under Varying Disclosure Characteristics

Abstract

Our study investigates relative changes to the value individuals place on the disclosure of their private information. We use an incentive compatible mechanism to capture an individual’s willingness-to-accept (WTA) for a privacy disclosure in three randomized experiments. Characteristics of the required privacy disclosures are manipulated by altering information context, intended secondary use of the disclosed private information, and the requirement to disclose personally identifying information. We consistently find across the experiments that the information context influences the relative value of a disclosure but we observe null effects for external secondary use and the inclusion of identifying information. We increase the saliency of the privacy disclosure characteristics in the second experiment, which is found to increase participants’ average WTA but does not change relative values across the varying disclosure characteristics. In the third experiment, we train participants on the potential consequences of disclosing private information, which does not increase participants WTA beyond simply increasing the saliency of the privacy factors in a disclosure. Training participants of the consequences also does not influence the relative value of privacy disclosures across the varying disclosure characteristics. However, through a post-experiment survey we find that participants do acknowledge the increased risk introduced through external secondary use and providing identifying information. Additionally, we find that the participants’ internet privacy concerns increase when they are trained on the consequences of disclosing private information online. These results provide a unique perspective on privacy valuations. They fill a gap in the literature by clarifying privacy factors that influence the value of a multidimensional disclosure and provide further evidence of the privacy paradox, where consumers claim a desire for privacy but their economic actions suggest otherwise.