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Stanford Study Explores Privacy Paradox Among Online Consumers

Stanford Study Explores Privacy Paradox

If you think people are a bit apprehensive when giving away personal information, think again. The Stanford Graduate School of Business recently explored new research that finds people are more than willing to give up that potentially sensitive personal information when there’s an incentive on the table.

Stanford Institute for Economic Policy Research senior fellow Susan Athey co-authored a study, along with MIT’s Christian Catalini and Catherine Tucker, in which the researchers explored this “privacy paradox.” Athey elaborates, “If you ask [users], they express frustration, unhappiness, or dislike of losing their privacy, [yet] they tend not to make choices that correspond to those preferences.”

Athey, Catalini, and Tucker examined “how 3,108 undergraduates played out their privacy preferences while choosing an online wallet to store and manage digital currency.“

They discovered the order of options significantly affected the choices each participant made. About 78 percent of students selected the first listing yet only 65 percent chose the same option when it was relisted second or lower. Details of each the digital wallet privacy features did not seem to impact the decision-making process.

The researchers found that the online behavior of students with stronger privacy preferences did not differ from those who happened to be less concerned. When presented with the option of a free pizza in exchange for the e-mail addresses of three friends, most students took up the offer.

According to the study, “consumers deviate from their own stated preferences regarding privacy in the presence of small incentives, frictions, and irrelevant information.” These insights raise policy implications about both the value of stated preferences and the need for broader privacy protections.

Athey offers, “All of these technology intermediaries have a huge impact on what you read, what you consume, and what you buy just by how they present you information. There’s a role for regulation here, clearly, in this area of privacy and security, but even beyond telling companies what to do, just making it simpler for consumers to make meaningful choices.”

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About the Author

Jonathan Pfeffer
Jonathan Pfeffer

Jonathan Pfeffer joined the Clear Admit and MetroMBA teams in 2015 after spending several years as an arts/culture writer, editor, and radio producer. In addition to his role as contributing writer at MetroMBA and contributing editor at Clear Admit, he is co-founder and lead producer of the Clear Admit MBA Admissions Podcast. He holds a BA in Film/Video, Ethnomusicology, and Media Studies from Oberlin College.

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