The Relation between Privacy Protection and Risk Attitudes, with a New Experimental Method to Elicit the Implicit Monetary Value of Privacy

CEGE Discussion Papers, Number 296 - November 2016

51 Pages Posted: 23 Nov 2016

See all articles by Alisa Frik

Alisa Frik

International Computer Science Institute (ICSI) / University of California Berkeley

Alexia Gaudeul

Georg-August-Universität Göttingen

Date Written: November 22, 2016

Abstract

We investigate the decision of experimental subjects to incur the risk of revealing personal private information to other participants. We do so by using a novel method to generate personal information that reliably induces privacy concerns in the laboratory. We show that individual decisions to incur privacy risk are correlated with decisions to incur monetary risk. We find that partially depriving subjects of control over the revelation of their personal information does not lead them to lose interest in protecting it. We also find that making subjects think of privacy decisions after financial decisions reduces their aversion to privacy risk. Finally, surveyed attitude to privacy and explicit willingness to pay or to accept payment for personal information correlate well with willingness to incur privacy risk. Having shown that privacy loss can be assimilated to a monetary loss, we compare decisions to incur risk in privacy lotteries with risk attitude in monetary lotteries to derive estimates of the implicit monetary value of privacy. The average implicit monetary value of privacy is about equal to the average willingness to pay to protect private information, but the two measures do not correlate at the individual level. We conclude by underlining the need to know individual attitudes to risk to properly evaluate individual attitudes to privacy as such.

Keywords: privacy, disclosure, risk, control, personal information, experiment

JEL Classification: C9, D81, O30

Suggested Citation

Frik, Alisa and Gaudeul, Alexia, The Relation between Privacy Protection and Risk Attitudes, with a New Experimental Method to Elicit the Implicit Monetary Value of Privacy (November 22, 2016). CEGE Discussion Papers, Number 296 - November 2016. Available at SSRN: https://ssrn.com/abstract=2874202 or http://dx.doi.org/10.2139/ssrn.2874202

Alisa Frik (Contact Author)

International Computer Science Institute (ICSI) / University of California Berkeley ( email )

Berkeley, CA
United States

Alexia Gaudeul

Georg-August-Universität Göttingen ( email )

Platz der Goettinger Sieben 3
Goettingen, 37073
Germany
+49 (0) 551 39 7333 (Phone)

HOME PAGE: http://agaudeul.wordpress.com

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