The Effect of Online Privacy Information on Purchasing Behavior: An Experimental Study

• Published in: Information systems research Vol. 22; no. 2; pp. 254 - 268
• Main Authors: Tsai, Janice Y., Egelman, Serge, Cranor, Lorrie, Acquisti, Alessandro
• Format: Journal Article
• Language: English
• Published: Linthicum INFORMS 01.06.2011; The Institute for Operations Research and the Management Sciences (INFORMS); Institute for Operations Research and the Management Sciences
• Subjects: Analysis; Competitive advantage; Computer privacy; Consumer behavior; Consumer information; Consumer research; Consumers; e-commerce; economics; Electronic commerce; experimental economics; Information storage and retrieval systems; Information systems; Marketing research; Merchants; Methods; Online searching; Personal information; Polls & surveys; Price premiums; Privacy; Purchasing; Search engines; Shopping; Studies; Websites; Willingness to pay; United States
• ISSN: 1047-7047; 1526-5536
• DOI: 10.1287/isre.1090.0260

Although online retailers detail their privacy practices in online privacy policies, this information often remains invisible to consumers, who seldom make the effort to read and understand those policies. This paper reports on research undertaken to determine whether a more prominent display of privacy information will cause consumers to incorporate privacy considerations into their online purchasing decisions. We designed an experiment in which a shopping search engine interface clearly and compactly displays privacy policy information. When such information is made available, consumers tend to purchase from online retailers who better protect their privacy. In fact, our study indicates that when privacy information is made more salient and accessible, some consumers are willing to pay a premium to purchase from privacy protective websites. This result suggests that businesses may be able to leverage privacy protection as a selling point.