An experimental economics approach toward quantifying online privacy choices
- 233 Downloads
The importance of personal privacy to Internet users has been extensively researched using a variety of survey techniques. The limitations of survey research are well-known and exist in part because there are no positive or negative consequences to responses provided by survey participants. Such limitations are the motivation for this work. Experimental economics is widely accepted by economists and others as an investigative technique that can provide measures of economic choice-making that are substantially more accurate than those provided by surveys. This paper describes our efforts at applying the techniques of experimental economics to provide a foundation for (a) estimating the values that consumers place on privacy and various forms of security (encryption, HIPAA, etc.) and for (b) quantifying user responses to changes in the Internet environment. The contribution of this study is a better understanding of individual decision-making in the context of benefits and costs of making private information available to Internet sites. Preliminary results from a series of pilot studies are consistent with optimizing behaviors, indicating that continued application of experimental economics techniques in the quantification of Internet user actions in privacy/security space will be illuminating. Our results show that Internet users place great value on security measures, both regulatory and technical, that make identity theft much less likely. Our Web-based experiments indicate that privacy- and security- enhancing protections are likely to be subject to moral hazard responses, as participants in our online experiments became more aggressive in their Internet usage with greater protection in place.
KeywordsInternet Personal privacy Security
- Ackerman, M. S., Cranor, L. F., & Reagle, J. (1999). Privacy in e-commerce: Examining user scenarios and privacy preferences. In Proceedings of the first ACM conference on electronic commerce (pp. 1–8).Google Scholar
- Anderson, R. (2001). Why information security is hard–an economic perspective. In Proceeding of 17th annual computer security applications conference, New Orleans, Louisiana.Google Scholar
- Antón, A. I., & Earp, J. B. (2001). Strategies for developing policies and requirements for secure electronic commerce systems. In A. K. Ghosh (Ed.), E-commerce security and privacy (pp. 29–46). Dordecht, The Netherlands: Kluwer.Google Scholar
- Bellotti, V. (1997). Design for privacy in multimedia computing and communications environments. In P. E. Agre & M. Rotenberg (Eds.), Technology and privacy: The new landscape (pp. 63–98). Cambridge: MIT.Google Scholar
- Earp, J. B., Poindexter, J. C., & Baumer, D. L. (2004). Modeling privacy values with experimental economics. In Paper presented to the Workshop for Privacy in an Electronic Society (Oct. 2004).Google Scholar
- Harris, L., et al. (1991, 1994, 1996, 1998). Harris-Equifax user privacy surveys. Atlanta, Georgia: Equifax.Google Scholar
- Horn, I., Hui, K., Lee, T., & Png, I. P. L. (2002). Online information privacy: Measuring the cost-benefit trade-off paper presented at the twenty-third international conference on information systems.Google Scholar
- Hui, K., Teo, H., & Lee, S. (2006). The value of privace assurance. MIS Quarterly (in press).Google Scholar
- Raul, A.P. (2002). Privacy and the Digital State: Balancing Public Information and Personal Privacy, Boston, MA: Kluwer.Google Scholar
- Smith, V. (2003). Constructivist and ecological rationality in economics. American Economic Review, 93(3), 465–508 (A version of Smith’s address to the Nobel Committee in 2002), http://www.law.gmu.edu/////////currnews/smith-lecture.html.
- Sullivan, B. (2005). ID theft again tops list of the FTC complaints. http://www.msnbc.msn.com/id/6891556/, Feb.
- Wathieu, L., & Friedman, A. (2005). An empirical approach to understanding privacy valuation. In Proceedings of the workshop on the economics of information privacy (WEIS) (2005).Google Scholar