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

34 Pages Posted: 15 Feb 2017 Last revised: 17 Apr 2018

See all articles by Susan Athey

Susan Athey

Stanford Graduate School of Business

Christian Catalini

Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Catherine E. Tucker

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

Multiple version iconThere are 2 versions of this paper

Date Written: April 8, 2018

Abstract

'Notice and Choice' has been the reference framework for how firms elicit data from consumers. This paper investigates distortions in consumer behavior which may limit the ability of consumers to safeguard their privacy using data from a field experiment at MIT. There are three findings. First, the effect small incentives have on disclosure may explain the privacy paradox: People say they care about privacy, but are willing to relinquish private data to firms quite easily when incentivized to do so. Second, small navigation costs have a tangible effect on how privacy-protective consumers' choices are, often in contrast with stated preferences. Third, the introduction of irrelevant, but reassuring information makes consumers less likely to avoid tracking. We discuss implications for the privacy strategy of firms.

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

Suggested Citation

Carleton Athey, Susan and Catalini, Christian and Tucker, Catherine E., The Digital Privacy Paradox: Small Money, Small Costs, Small Talk (April 8, 2018). 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

Susan Carleton Athey

Stanford Graduate School of Business ( email )

655 Knight Way
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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

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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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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