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The Value of Online Information Privacy: An Empirical Investigation

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Author Info

  • Il-Horn Hann

    (Univeristy of Southern California)

  • Kai-Lung Hui

    (National University of Singapore)

  • Tom S. Lee

    (National University of Singapore)

  • I.P.L. Png

    (National University of Singapore)

Abstract

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.

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File URL: http://128.118.178.162/eps/io/papers/0304/0304001.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 0304001.

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Length: 29 pages
Date of creation: 01 Apr 2003
Date of revision: 01 Apr 2003
Handle: RePEc:wpa:wuwpio:0304001

Note: Type of Document - PDF; prepared on Windows XP; pages: 29; figures: included
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Web page: http://128.118.178.162

Related research

Keywords: Information privacy; conjoint analysis; cost-benefit tradeoff; privacy concern; monetary reward; time-saving service;

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References

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  1. Roger Hartley & Lisa Farrell, 2002. "Can Expected Utility Theory Explain Gambling?," American Economic Review, American Economic Association, vol. 92(3), pages 613-624, June.
  2. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279.
  3. Leclerc, France & Schmitt, Bernd H & Dube, Laurette, 1995. " Waiting Time and Decision Making: Is Time like Money?," Journal of Consumer Research, University of Chicago Press, vol. 22(1), pages 110-19, June.
  4. K. Sridhar Moorthy, 1984. "Market Segmentation, Self-Selection, and Product Line Design," Marketing Science, INFORMS, vol. 3(4), pages 288-307.
  5. Ratchford, Brian T, 2001. " The Economics of Consumer Knowledge," Journal of Consumer Research, University of Chicago Press, vol. 27(4), pages 397-411, March.
  6. Brinberg, David & Wood, Ronald, 1983. " A Resource Exchange Theory Analysis of Consumer Behavior," Journal of Consumer Research, University of Chicago Press, vol. 10(3), pages 330-38, December.
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Cited by:
  1. Kai-Lung Hui & I.P.L. Png, 2005. "The Economics of Privacy," Industrial Organization 0505007, EconWPA, revised 29 Aug 2005.
  2. Pau, L-F., 2006. "Privacy Management Service Contracts as a New Business Opportunity for Operators," ERIM Report Series Research in Management ERS-2006-060-LIS, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.

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