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

By Lorrie Faith Cranor, Serge Egelman, Janice Y. Tsai, Alessandro Acquisti. Workshop on the Economics of Information Security, 2011

945 citations recorded by the source corpus.

Although online retailers detail their privacy practices in online privacy policies, this information often remains invisible to consumers, who seldom make the effort to read and understand those policies. 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 clearly and compactly displays privacy policy information. When such information is made available, consumers tend to purchase from online retailers who better protect their privacy. In fact, our study indicates that when privacy information is made more salient and accessible, some consumers are willing to pay a premium to purchase from privacy protective websites. This result suggests that businesses may be able to leverage privacy protection as a selling point.

Subfields: Information Systems and Management, Marketing, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/535be807f998e8eb47cea9d1b3d437e491c3b625

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Citations in the corpus

What Is Privacy Worth? (2013, neutral): “However, Tsai et al. (2009) found that once privacy-relevant information was made salient, participants in an experiment paid moderate price premia (of roughly 50 cents) to purchase goods from online merchants with better privacy protection, and Varian et al. (2005) and Png (2007), trying to…”
Engineering Information Disclosure: Norm Shaping Designs (2016, background): “Both explanations (uncertainty over preferences or uncertainty over social norms) imply that users may rely on social cues (such as the behavior of others) as they decide how much to disclose [34].”
Augmenting the eye of the beholder: exploring the strategic potential of augmented reality to enhance online service experiences (2017, background): “On the one hand, many customers do not make the effort to read privacy policies or find privacy statements too difficult to understand fully (Tsai et al. 2011).”
Secrets and Likes: The Drive for Privacy and the Difficulty of Achieving It in the Digital Age (2020, background): “When information about sellers’ privacy policies was made salient and understandable, subjects in a lab were willing to pay roughly a 4% premium to purchase from more privacy-oriented sellers (Tsai et al., 2011).”
Polisis: Automated Analysis and Presentation of Privacy Policies Using Deep Learning (2018, background): “Another possible application is privacy-centered comparative shopping [33].”
Social Media Brand Community and Consumer Behavior: Quantifying the Relative Impact of User- and Marketer-Generated Content (2013, background): “We also expect a user’s decision to join the FFS fan page (and thus Facebook) to be related to concerns over data or information privacy (which can be proxied by phone number and address disclosures) and interests in receiving marketing communications from FFS over different channels (Tsai et al. 20”
The Economics of Personal Data and the Economics of Privacy (2010, background): “”(12) Similarly, in 2009, a survey by Turow et al. (2009) found that a large majority of Americans resist to tailored advertising.”
The Digital Privacy Paradox: Small Money, Small Costs, Small Talk (2017, neutral): “consumers would make the right privacy choices (Tsai et al., 2011).”
The Economics of Privacy (2016, background): “Among them, Varian (1997) observes that the development of low-cost technologies for data manipulation generates new concerns for personal information processing. Varian (1997) nonetheless recognizes that consumers may suffer privacy costs when too little personal information about them is being sha”
Nudges for Privacy and Security (2017, background): “Tsai et al. [2011] found that purchasing decisions were impacted when search engines included information about merchants’ privacy practices in their results.”
Privacy attitudes and privacy behaviour: A review of current research on the privacy paradox phenomenon (2017, background): “Tsai et al. (2011) conducted a two-phase study that involved an online concerns survey and an online shopping experiment.”