The Digital Privacy Paradox: Small Money, Small Costs, Small Talk

32 Pages Posted: 15 Feb 2017  

Susan Athey

Stanford Graduate School of Business

Christian Catalini

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS)

Date Written: February 13, 2017

Abstract

This paper uses data from the MIT digital currency experiment to shed light on consumer behavior regarding commercial, public and government surveillance. The setting allows us to explore the apparent contradiction that many cryptocurrencies offer people the chance to escape government surveillance, but do so by making transactions themselves public on a distributed ledger (a 'blockchain'). We find three main things. First, the effect of small incentives may explain the privacy paradox, where people say they care about privacy but are willing to relinquish private data quite easily. Second, small costs introduced during the selection of digital wallets by the random ordering of featured options, have a tangible effect on the technology ultimately adopted, 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 at large.

Keywords: privacy, digital currency, bitcoin, blockchain, digital wallets

Suggested Citation

Athey, Susan and Catalini, Christian and Tucker, Catherine E., The Digital Privacy Paradox: Small Money, Small Costs, Small Talk (February 13, 2017). MIT Sloan Research Paper; 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

Susan Carleton Athey

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Christian Catalini (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-480
Cambridge, MA MA 02142
United States

HOME PAGE: http://mitsloan.mit.edu/faculty-and-research/faculty-directory/detail/?id=58777

Catherine E. Tucker

Massachusetts Institute of Technology (MIT) - Management Science (MS) ( email )

100 Main St
E62-536
Cambridge, MA 02142
United States

HOME PAGE: http://cetucker.scripts.mit.edu

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