What Is Personal Information Worth? Exploring the Extension of the Endowment Effect into Close Others

Abstract

Individuals attach greater value to the goods they own, and personal information is no exception. This phenomenon of an individual’s valuation disparity is known as the endowment effect. The endowment effect is generally interpreted as the disparity between an individual’s willingness to accept (WTA) a proposal to trade information and the person’s willingness to pay (WTP) for protecting information. However, very few information studies have investigated whether the endowment effect can be extended in terms of intangible goods, such as personal information. This study elucidates whether the endowment effect exists in the information of the self, close others, and acquaintances. Drawing on the self-expansion and self-extension theories, we conducted a scenario-based field experiment to investigate how individuals monetarily valuate these aspects. The results demonstrated the endowment effect in terms of personal information and established that it was extended through two sides: possession (personal information) and ownership (close others). Individuals add more value to personal information and that of close others. This study deepens knowledge on the endowment effect and privacy valuation, and provides theoretical evidence and new perspectives for practitioners and multifarious realms, including laws, policies, security, and marketing strategies. It calls for innovations in the management of personal information.