IoT Marketplace: Willingness-To-Pay vs. Willingness-To-Accept

In Proceedings of the 20th Annual Workshop on the Economics of Information Security (WEIS 2021).

24 Pages Posted: 25 Jun 2021

See all articles by Shakthidhar Gopavaram

Shakthidhar Gopavaram

Indiana University Bloomington

Jayati Dev

Indiana University Bloomington - School of Informatics and Computing

Sanchari Das

University of Denver

L. Jean Camp

Indiana University Bloomington - School of Informatics and Computing

Date Written: June 28, 2021

Abstract

Willingness-To-Pay (WTP) is the most a person is willing to pay for a good or service. Conversely, Willingness-To-Accept (WTA) is the minimum amount a person is willing to accept for giving up a good or service. People often attribute a higher value for privacy in the WTA condition when compared to the WTP condition. In behavioral economics of privacy and security, this discrepancy between WTP and WTA has been explained by the endowment effect and the status-quo bias. In this study, we aim to emulate the effects of WTP and WTA through interface design. Specifically, we employed the principles of status-quo bias to build two versions of the IoT Marketplace. While one design of the marketplace emulated the WTA condition, the other emulated the WTP condition. In both versions of the marketplace, we communicated the aggregate privacy rating associated with the IoT device using the same indicator. We evaluated the effect the two interfaces had on product selection by conducting a study where participants were asked to purchase an IoT device using either a WTA interface or a WTP interface. Our results show that participants using the interface that emulated the WTA condition were more likely to pay a premium to purchase devices with a higher privacy rating when compared to the participants using the interface that emulated the WTP condition. We also append results showing that when asked to select items without making the purchases the same effect was more pronounced.

Keywords: Willingness-to-pay, Willingness-to-protect, Willingness-to-accept, Experimental economics, Privacy, Information security, Marketplace, IoT, Usable Privacy and Security, Endowment Effect

Suggested Citation

Gopavaram, Shakthidhar and Dev, Jayati and Das, Sanchari and Camp, L. Jean, IoT Marketplace: Willingness-To-Pay vs. Willingness-To-Accept (June 28, 2021). In Proceedings of the 20th Annual Workshop on the Economics of Information Security (WEIS 2021)., Available at SSRN: https://ssrn.com/abstract=3867652 or http://dx.doi.org/10.2139/ssrn.3867652

Shakthidhar Gopavaram

Indiana University Bloomington ( email )

Dept of Biology
100 South Indiana Ave.
Bloomington, IN 47405
United States

Jayati Dev

Indiana University Bloomington - School of Informatics and Computing ( email )

Informatics West, Room 204
901 E. 10th Street
Bloomington, IN 47408
United States

Sanchari Das (Contact Author)

University of Denver ( email )

2201 S. Gaylord St
Denver, CO 80208-2685
United States

L. Jean Camp

Indiana University Bloomington - School of Informatics and Computing ( email )

901 E 10th St
Bloomington, IN 47401
United States

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