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

34 Pages Posted: 13 Jun 2017

See all articles by Susan Athey

Susan Athey

Stanford Graduate School of Business

Christian Catalini

Massachusetts Institute of Technology (MIT) - Sloan School of Management; Calibra, Inc.; 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: June 2017

Abstract

'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.

Suggested Citation

Carleton Athey, Susan and Catalini, Christian and Tucker, Catherine E., The Digital Privacy Paradox: Small Money, Small Costs, Small Talk (June 2017). NBER Working Paper No. w23488. Available at SSRN: https://ssrn.com/abstract=2984665

Susan Carleton Athey (Contact Author)

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Christian Catalini

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

Calibra, Inc.

1 Hacker Way
Menlo Park, CA 94025
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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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