Privacy in electronic commerce and the economics of immediate gratification

By Alessandro Acquisti. 2004

583 citations recorded by the source corpus.

Dichotomies between privacy attitudes and behavior have been noted in the literature but not yet fully explained. We apply lessons from the research on behavioral economics to understand the individual decision making process with respect to privacy in electronic commerce. We show that it is unrealistic to expectindividual rationality in this context. Models of self-control problems and immediate gratification offer more realistic descriptions of the decision process and are more consistent with currently available data. In particular, we show why individuals who may genuinely want to protect their privacy might not do so because of psychological distortions well documented in the behavioral literature; we show that these distortions may affect not only 'naive' individuals but also 'sophisticated' ones; and we prove that this may occur also when individuals perceive the risks from not protecting their privacy as significant.

Subfields: Marketing, Sociology and Political Science, Strategy and Management

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Citations in the corpus

Extremal Mechanisms for Local Differential Privacy (2014, background): “For example, users of social networking sites are increasingly cautious about their privacy, but still find it inevitable to agree to share their personal information in order to benefit from customized services such as recommendations and personalized search [1, 2].”
The Economics of Privacy (2016, background): “Those considerations are no less important than the measurable dimensions of privacy trade-offs, since they relate to the crucial linkages between privacy, on one hand, and human autonomy, dignity, and freedom on the other hand.”
Strangers on a Plane: Context-Dependent Willingness to Divulge Sensitive Information (2011, background): “These effects tend to be especially pronounced when people are uncertain about their own values (Fox and Tversky 1995; Griffin, Liu, and Khan 2005; Hsee et al. 1999, 2003), which is often the case for privacy (Acquisti 2004).”
The Value of Privacy Assurance: An Exploratory Field Experiment (2007, background): “See, also, Acquisti (2004) for an interesting analysis on why some people are willing to give up privacy for seemingly small rewards.”
Privacy attitudes and privacy behaviour: A review of current research on the privacy paradox phenomenon (2017, background): “Acquisti (2004) claims that “[p]eople may not be able to act as economically rational agents when it comes to personal privacy.””
The Economics of Personal Data and the Economics of Privacy (2010, background): “while other is protected, with common satisfaction of both data subjects and data holders (see Acquisti (2008) and Section 4.”
Engineering Privacy (2009, background): “People may overvalue the immediate benefits they obtain from revealing information and under-estimate the cumulative risks associated with the cost of privacy loss [64].”
Secrets and Likes: The Drive for Privacy and the Difficulty of Achieving It in the Digital Age (2020, background): “A second reason why people may take actions that do not realize their desired levels of privacy is that the benefits of actions such as using an app or accessing a source of information are typically immediate, while the privacy costs are often delayed, uncertain, and intangible (Acquisti, 2004).”
Privacy Concerns Versus Desire for Interpersonal Awareness in Driving the Use of Self-Disclosure Technologies: The Case of Instant Messaging in Two Cultures (2011, background): “An existing explanation for such privacy attitude/behavior dichotomy is that users’ privacy decision processes are affected by bounded rationality [2-3].”
What Is Privacy Worth? (2013, unknown): “economic cost, the risk of experiencing this cost is often delayed and uncertain (Acquisti [2004], Acquisti and Grossklags [2005]), and hence subject to the complexities of discounting for risk and time. Given all of this, it would not be surprising to find valuations of privacy to be subject to man”
Blissfully ignorant: the effects of general privacy concerns, general institutional trust, and affect in the privacy calculus (2015, background): “…by psychological limitations, such as the inability to process all information relevant to the cost-benefit-ratio (Acquisti & Grossklags, 2005; Acquisti et al., 2009), intertemporal choice (Keith et al., 2012) or the attempt for immediate gratification (Acquisti, 2004; Wilson & Valacich, 2012).”
Unwillingness to Pay for Privacy: A Field Experiment (2011, background): “Relatedly, presentbiased preferences have been put forward as an explanation of inconsistent privacy choices (Acquisti, 2004).”