IDEAS home Printed from https://ideas.repec.org/p/esm/wpaper/esmt-09-001.html
   My bibliography  Save this paper

An empirical approach to understanding privacy concerns

Author

Listed:
  • Luc Wathieu

    (ESMT European School of Management and Technology)

  • Allan Friedman

    (John F. Kennedy School, Harvard University)

Abstract

This paper shows that privacy concerns in commercial contexts are not solely driven by a desire to control the transmission of personal information or to avoid intrusive direct marketing campaigns. When they express privacy concerns, consumers anticipate indirect economic consequences of data use, such as price discrimination. Our general hypothesis is that consumers are capable of expressing differentiated levels of concerns in the presence of changes that suggest indirect consequences of information transmission. We suggest that there is a homo economicus behind privacy concerns, not simply a primal fear. This hypothesis is tested in a large-scale experiment evoking the context of affinitybased direct marketing of insurances, which relies on data transmitted by alumni associations. Because opt-in and opt-out choices offered by firms to consumers usually capture non-situational preferences about data transmission, their ability to enact privacy concerns is questioned by our findings.

Suggested Citation

  • 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.
  • Handle: RePEc:esm:wpaper:esmt-09-001
    as

    Download full text from publisher

    File URL: http://static.esmt.org/publications/workingpapers/ESMT-09-001.pdf
    File Function: First version, 2009
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Curtis R. Taylor, 2004. "Consumer Privacy and the Market for Customer Information," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 631-650, Winter.
    3. Benjamin Hermalin & Michael Katz, 2006. "Privacy, property rights and efficiency: The economics of privacy as secrecy," Quantitative Marketing and Economics (QME), Springer, vol. 4(3), pages 209-239, September.
    4. Il-Horn Hann & Kai-Lung Hui & Sang-Yong T. Lee & Ivan P. L. Png, 2008. "Consumer Privacy and Marketing Avoidance: A Static Model," Management Science, INFORMS, vol. 54(6), pages 1094-1103, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Avi Goldfarb & Catherine Tucker, 2011. "Online Display Advertising: Targeting and Obtrusiveness," Marketing Science, INFORMS, vol. 30(3), pages 389-404, 05-06.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dengler, Sebastian & Prüfer, Jens, 2021. "Consumers' privacy choices in the era of big data," Games and Economic Behavior, Elsevier, vol. 130(C), pages 499-520.
    2. Oliver Budzinski & Annika Stöhr, 2019. "Competition policy reform in Europe and Germany – institutional change in the light of digitization," European Competition Journal, Taylor & Francis Journals, vol. 15(1), pages 15-54, January.
    3. Avi Goldfarb, 2014. "What is Different About Online Advertising?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(2), pages 115-129, March.
    4. Cecere, Grazia & Rochelandet, Fabrice, 2013. "Privacy intrusiveness and web audiences: Empirical evidence," Telecommunications Policy, Elsevier, vol. 37(10), pages 1004-1014.
    5. Florian Hoffmann & Roman Inderst & Marco Ottaviani, 2020. "Persuasion Through Selective Disclosure: Implications for Marketing, Campaigning, and Privacy Regulation," Management Science, INFORMS, vol. 66(11), pages 4958-4979, November.
    6. Nicola Jentzsch, 2017. "Secondary use of personal data: a welfare analysis," European Journal of Law and Economics, Springer, vol. 44(1), pages 165-192, August.
    7. Blades, Nicholas & Herrera-González, Fernando, 2016. "An Economic Analysis of Personal Data Protection Obligations in the European Union," 27th European Regional ITS Conference, Cambridge (UK) 2016 148661, International Telecommunications Society (ITS).
    8. Caleb S. Fuller, 2018. "Privacy law as price control," European Journal of Law and Economics, Springer, vol. 45(2), pages 225-250, April.
    9. Kesler, Reinhold & Kummer, Michael E. & Schulte, Patrick, 2017. "Mobile applications and access to private data: The supply side of the Android ecosystem," ZEW Discussion Papers 17-075, ZEW - Leibniz Centre for European Economic Research.
    10. Morlok, Tina & Matt, Christian & Hess, Thomas, 2017. "Privatheitsforschung in den Wirtschaftswissenschaften: Entwicklung, Stand und Perspektiven," Working Papers 1/2017, University of Munich, Munich School of Management, Institute for Information Systems and New Media.
    11. Zike Cao & Kai-Lung Hui & Hong Xu, 2018. "An Economic Analysis of Peer Disclosure in Online Social Communities," Information Systems Research, INFORMS, vol. 29(3), pages 546-566, September.
    12. Jeremy M. Burke & Curtis R. Taylor & Liad Wagman, 2012. "Information Acquisition in Competitive Markets: An Application to the US Mortgage Market," American Economic Journal: Microeconomics, American Economic Association, vol. 4(4), pages 65-106, November.
    13. Michael Kummer & Patrick Schulte, 2019. "When Private Information Settles the Bill: Money and Privacy in Google’s Market for Smartphone Applications," Management Science, INFORMS, vol. 65(8), pages 3470-3494, August.
    14. Ramon Casadesus-Masanell & Andres Hervas-Drane, 2015. "Competing with Privacy," Management Science, INFORMS, vol. 61(1), pages 229-246, January.
    15. Paul Heidhues & Botond Kőszegi, 2017. "Naïveté-Based Discrimination," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 132(2), pages 1019-1054.
    16. Andrew F. Daughety & Jennifer F. Reinganum, 2010. "Public Goods, Social Pressure, and the Choice between Privacy and Publicity," American Economic Journal: Microeconomics, American Economic Association, vol. 2(2), pages 191-221, May.
    17. James Campbell & Avi Goldfarb & Catherine Tucker, 2015. "Privacy Regulation and Market Structure," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 24(1), pages 47-73, March.
    18. Budzinski, Oliver & Grusevaja, Marina, 2017. "Die Medienökonomik personalisierter Daten und der Facebook-Fall," Ilmenau Economics Discussion Papers 107, Ilmenau University of Technology, Institute of Economics.
    19. Loertscher, Simon & Marx, Leslie M., 2020. "Digital monopolies: Privacy protection or price regulation?," International Journal of Industrial Organization, Elsevier, vol. 71(C).
    20. Savage, Scott J. & Waldman, Donald M., 2015. "Privacy tradeoffs in smartphone applications," Economics Letters, Elsevier, vol. 137(C), pages 171-175.

    More about this item

    Keywords

    privacy; opt-in/opt-out; insurance;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:esm:wpaper:esmt-09-001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ESMT Faculty Publications (email available below). General contact details of provider: https://edirc.repec.org/data/emstbde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.