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An experimental economics approach toward quantifying online privacy choices

Author

Listed:
  • J. C. Poindexter

    (North Carolina State University)

  • Julia B. Earp

    (North Carolina State University)

  • David L. Baumer

    (North Carolina State University)

Abstract

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.

Suggested Citation

  • J. C. Poindexter & Julia B. Earp & David L. Baumer, 2006. "An experimental economics approach toward quantifying online privacy choices," Information Systems Frontiers, Springer, vol. 8(5), pages 363-374, December.
  • Handle: RePEc:spr:infosf:v:8:y:2006:i:5:d:10.1007_s10796-006-9013-4
    DOI: 10.1007/s10796-006-9013-4
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    References listed on IDEAS

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    Cited by:

    1. Luc Wathieu & Allan Friedman, 2009. "An empirical approach to understanding privacy concerns," ESMT Research Working Papers ESMT-09-001, ESMT European School of Management and Technology, revised 14 Jan 2009.
    2. Bettina Rockenbach & Abdolkarim Sadrieh & Anne Schielke, 2021. "Paying with your personal data: the insensitivity of private information provision to asymmetric benefits," Journal of the Economic Science Association, Springer;Economic Science Association, vol. 7(1), pages 64-73, September.
    3. Sophie Cockcroft & Saphira Rekker, 2016. "The relationship between culture and information privacy policy," Electronic Markets, Springer;IIM University of St. Gallen, vol. 26(1), pages 55-72, February.
    4. Chulhwan Chris Bang, 2015. "Information systems frontiers: Keyword analysis and classification," Information Systems Frontiers, Springer, vol. 17(1), pages 217-237, February.
    5. Lawrence A. Gordon & Martin P. Loeb, 2006. "Economic aspects of information security: An emerging field of research," Information Systems Frontiers, Springer, vol. 8(5), pages 335-337, December.

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