33 Pages Posted: 15 Feb 2017 Last revised: 3 Jun 2017
Date Written: May 31, 2017
`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: privacy, digital currency, bitcoin, blockchain, digital wallets
Suggested Citation: Suggested Citation
Athey, Susan and Catalini, Christian and Tucker, Catherine E., The Digital Privacy Paradox: Small Money, Small Costs, Small Talk (May 31, 2017). MIT Sloan Research Paper No. 5196-17; Stanford University Graduate School of Business Research Paper No. 17-14. Available at SSRN: https://ssrn.com/abstract=2916489 or http://dx.doi.org/10.2139/ssrn.2916489