Individual Trust and Consumer Risk Perception

This paper examines the relationship between trust and risk perceptions of online activities. Specifically, we study the impact of an individual’s trust of other people on the severity and certainty of risk, which in turn influence an individual’s risk perception. We administer a 23-item survey to 386 participants at a large southeastern university, and test our model using structural equation modeling. We find evidence that supports the proposed relationship, implying that perceived certainty of risk is negatively associated with trust of individuals and that both certainty and severity of risk have a positive impact on an individual’s risk perception. Our results indicate that users may underestimate risks when they interact with people they trust, suggesting the need for a higher level of protection for transactions between individuals who are familiar with each other. From a modeling perspective, our straightforward model of trust and risk could be used in future studies that examine specific online activities.