The Data Privacy Paradox and Digital Demand

55 Pages Posted: 1 Jun 2021 Last revised: 18 Nov 2021

See all articles by Long Chen

Long Chen

Cheung Kong Graduate School of Business; Luohan Academy

Yadong Huang

Luohan Academy

Shumiao Ouyang

Princeton University - Department of Economics and Bendheim Center for Finance

Wei Xiong

Princeton University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: May 2021

Abstract

A central issue in privacy governance is understanding how users balance their privacy preferences and data sharing to satisfy service demands. We combine survey and behavioral data of a sample of Alipay users to examine how data privacy preferences affect their data sharing with third-party mini-programs on the Alipay platform. We find that there is no relationship between the respondents’ self-stated privacy concerns and their number of data-sharing authorizations, confirming the puzzling data privacy paradox. Instead of attributing this paradox to the respondents’ unreliable survey responses, resignation from active protection of their data privacy, or behavioral factors in making their data-sharing choices, we show that this phenomenon can be explained by a curious finding that users with stronger privacy concerns tend to benefit more from using mini-programs. This positive relationship between privacy concerns and digital demands further suggests that consumers may develop data privacy concerns as a by-product of the process of using digital applications, not because such concerns are innate.

Institutional subscribers to the NBER working paper series, and residents of developing countries may download this paper without additional charge at www.nber.org.

Suggested Citation

Chen, Long and Chen, Long and Huang, Yadong and Ouyang, Shumiao and Xiong, Wei, The Data Privacy Paradox and Digital Demand (May 2021). Available at SSRN: https://ssrn.com/abstract=3856834 or http://dx.doi.org/10.2139/ssrn.3856834

Long Chen (Contact Author)

Luohan Academy ( email )

No. 556, Xixi Road, Z Space
Xihu District
Hangzhou, Zhejiang 310013
China
+86-0571-2688-8888-75520 (Phone)

Cheung Kong Graduate School of Business ( email )

Oriental Plaza, Tower E3
One East Chang An Avenue
Beijing, 100738
China

Yadong Huang

Luohan Academy ( email )

No. 556, Xixi Road, Z Space
Xihu District
Hangzhou, Zhejiang 310013
China

Shumiao Ouyang

Princeton University - Department of Economics and Bendheim Center for Finance ( email )

Wei Xiong

Princeton University - Department of Economics ( email )

Princeton, NJ 08544-1021
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
6
Abstract Views
161
PlumX Metrics