The Value of Online Information Privacy: An Empirical Investigation

Concern over online information privacy is widespread and rising. However, prior research is silent about the value of information privacy in the presence of potential benefits from sharing personally identifiable information. We analyzed individuals' trade-offs between the benefits and costs of providing personal information to websites. We found that benefits - monetary reward and future convenience - significantly affect individuals' preferences over websites with differing privacy policies. We also quantified the value of website privacy protection. Among U.S. subjects, protection against errors, improper access, and secondary use of personal information is worth US$30.49 - 44.62. Finally, we identified three distinct segments of Internet consumers - privacy guardians, information sellers, and convenience seekers.Information privacy, conjoint analysis, cost-benefit tradeoff, privacy concern, monetary reward, time-saving service

Consumer Privacy and Marketing Avoidance

We introduce consumer avoidance into analytical marketing research. We show that consumer efforts to conceal themselves and to deflect marketing have a crucial impact on sellers¡¯ marketing strategy. Under reasonable conditions, seller marketing is a strategic complement with consumer concealment. Hence, consumer measures to conceal themselves from marketing will increase its cost-effectiveness and lead sellers to market more. Policies that encourage consumers to conceal their identities would lead sellers to increase marketing. By contrast, policies that encourage consumers to deflect seller marketing would lead sellers to reduce marketing. Further, there is a clear need for public policy. To the extent of the externality from the sellers to consumers, the equilibrium levels of marketing (chosen by sellers) and concealment and deflection (chosen by consumers) exceed the social optimum.

The Value of Online Information Privacy: An Empirical Investigation

Concern over online information privacy is widespread and rising. However, prior research is silent about the value of information privacy in the presence of potential benefits from sharing personally identifiable information. Analyzing individuals' trade-offs between the benefits and costs of providing personal information to websites revealed that benefits, monetary reward and future convenience, significantly affect individuals' preferences over websites with differing privacy policies. Quantifying the value of website privacy protection revealed that among U.S. subjects, protection against errors, improper access, and secondary use of personal information is worth US $30.49 - 44.62. Finally, three distinct segments of Internet consumers were determined: privacy guardians, information sellers and convenience seekers.

Sales and Promotions: A More General Model

We embed the Varian (1980) model in a broader setting that considers how switcher/loyal customer segments are determined. Generally, customer acquisition is deterministic while pricing is randomized. The equilibrium outcome depends on the timing of customer acquisition relative to pricing. If sellers acquire customers before setting prices, the unique equilibrium is asymmetric. If sellers acquire customers and set prices simultaneously, the unique equilibrium is symmetric. Our results provide a fundamental justification for previous analyses that variously assumed the outcome to be asymmetric or symmetric. The comparative statics for the asymmetric and symmetric equilibria are identical.competition, pricing, customer acquisition

Online Information Privacy: Measuring the Cost-Benefit Trade-Off

Concern over information privacy is widespread and rising. However, prior research is silent about the value of information privacy and the benefit of privacy protection. We conducted a conjoint analysis to explore individualsí trade-offs between the benefits and costs of providing personal information to Websites. We find that economic incentives (monetary reward and future convenience) do affect individualsí preferences over Websites with differing privacy policies. For instance, the disallowance of secondary use of personal information is worth between $39.83 and$49.78. Surprisingly, we find that cost-benefit trade-offs did not vary with personal characteristics including gender, contextual knowledge, individualism, and trust propensity