Working Paper: NBER ID: w23488
Authors: Susan Athey; Christian Catalini; Catherine Tucker
Abstract: 'Notice and Choice' has been a mainstay of policies designed to safeguard consumer privacy. This paper investigates distortions in consumer behavior when faced with notice and choice which may limit the ability of consumers to safeguard their privacy using field experiment data from the MIT digital currency experiment. There are three findings. First, the effect small incentives have on disclosure may explain the privacy paradox: Whereas people say they care about privacy, they are willing to relinquish private data quite easily when incentivized to do so. Second, small navigation costs have a tangible effect on how privacy-protective consumers' choices are, often in sharp contrast with individual stated preferences about privacy. Third, the introduction of irrelevant, but reassuring information about privacy protection makes consumers less likely to avoid surveillance, regardless of their stated preferences towards privacy.
Keywords: Digital Privacy; Consumer Behavior; Field Experiment; Incentives; Privacy Paradox
JEL Codes: C93; D62; D8; K10; O3; O31; O38
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| small incentives (M52) | decrease in privacy protection behaviors (K24) |
| ordering of wallet options (C69) | decrease in selection of privacy-maximizing wallets (G50) |
| irrelevant information about encryption (Y50) | decrease in privacy-protective actions (K24) |