Beyond the Privacy Paradox: Objective versus Relative Risk in Privacy Decision Making

43 Pages Posted: 16 Apr 2016

See all articles by Idris Adjerid

Idris Adjerid

Pamplin College of Business

Eyal Peer

Hebrew University of Jerusalem - Federmann School of Government and Public Policy

Alessandro Acquisti

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management

Date Written: April 14, 2016

Abstract

Privacy decision making has been examined from various perspectives. A dominant “normative” perspective has focused on rational processes by which consumers with stable preferences for privacy weigh the expected benefits of privacy choices against their potential costs. More recently, an alternate “behavioral” perspective has leveraged theories from behavioral decision research to construe privacy decision making as a process in which cognitive heuristics and biases predictably occur. In a series of experiments, we compare the predictive power of these two perspectives by evaluating the impact of changes in objective risk of disclosure and the impact of changes in relative perceptions of risk of disclosure on both hypothetical and actual consumer privacy choices. We find that both relative and objective risks can, in fact, impact consumer privacy decisions. However, and surprisingly, the impact of objective changes in risk diminishes between hypothetical and actual choice settings. Vice versa, the impact of relative risk is more pronounced going from hypothetical to actual choice settings. Our results suggest a way to integrate diverse streams of IS literature on privacy decision making: consumers may both over-estimate their response to normative factors and under-estimate their response to behavioral factors in hypothetical choice contexts relative to actual choice contexts.

Keywords: Behavioral Economcis, Privacy, Privacy Paradox, Reference Dependence, Policy

Suggested Citation

Adjerid, Idris and Pe'er, Eyal and Acquisti, Alessandro, Beyond the Privacy Paradox: Objective versus Relative Risk in Privacy Decision Making (April 14, 2016). Available at SSRN: https://ssrn.com/abstract=2765097 or http://dx.doi.org/10.2139/ssrn.2765097

Idris Adjerid (Contact Author)

Pamplin College of Business ( email )

2058 Pamplin College of Business
Blacksburg, VA 20461
United States

Eyal Pe'er

Hebrew University of Jerusalem - Federmann School of Government and Public Policy ( email )

Israel

Alessandro Acquisti

Carnegie Mellon University - H. John Heinz III School of Public Policy and Management ( email )

Pittsburgh, PA 15213-3890
United States
412-268-9853 (Phone)
412-268-5339 (Fax)

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