Overcoming Online Information Privacy Concerns: An Information-Processing Theory Approach

The advent of the Internet has made the transmission of personally identifiable information more common and often unintended by the user. As personal information becomes more accessible, individuals worry that businesses misuse the information that is collected while they are online. Organizations have tried to mitigate this concern in two ways: (1) by offering privacy policies regarding the handling and use of personal information and (2) by offering benefits such as financial gains or convenience. In this paper, we interpret these actions in the context of the information-processing theory of motivation. Information-processing theories, also known as expectancy theories in the context of motivated behavior, are built on the premise that people process information about behavior-outcome relationships. By doing so, they are forming expectations and making decisions about what behavior to choose. Using an experimental setting, we empirically validate predictions that the means to mitigate privacy concerns are associated with positive valences resulting in an increase in motivational score. In a conjoint analysis exercise, 268 participants from the United States and Singapore face trade-off situations, where an organization may only offer incomplete privacy protection or some benefits. While privacy protections (against secondary use, improper access, and error) are associated with positive valences, we also find that financial gains and convenience can significantly increase individuals' motivational score of registering with a Web site. We find that benefits—monetary reward and future convenience—significantly affect individuals' preferences over Web sites with differing privacy policies. We also quantify the value of Web site privacy protection. Among U.S. subjects, protection against errors, improper access, and secondary use of personal information is worth $30.49-$44.62. Finally, our approach also allows us to identify three distinct segments of Internet users—privacy guardians, information sellers, and convenience seekers.

[1]  Uriel G. Foa,et al.  Interpersonal and Economic Resources , 1971, Science.

[2]  A. Tversky,et al.  Conjoint-measurement analysis of composition rules in psychology. , 1971 .

[3]  D. D. Simmons,et al.  Invasion of privacy and judged benefit of personality-test inquiry. , 1968, The Journal of general psychology.

[4]  Stuart L. Esrock,et al.  A Dichotomy of Privacy: Personal and Professional Attitudes of Marketers , 1999 .

[5]  M. Wedel,et al.  Metric Conjoint Segmentation Methods: A Monte Carlo Comparison , 1996 .

[6]  P E Green,et al.  NEW WAYS TO MEASURE CONSUMER JUDGMENTS , 1975 .

[7]  Lisa Farrell,et al.  Can Expected Utility Theory Explain Gambling , 2002 .

[8]  R. Bies,et al.  Consumer Privacy: Balancing Economic and Justice Considerations , 2003 .

[9]  Mary J. Culnan,et al.  "How Did They Get My Name?": An Exploratory Investigation of Consumer Attitudes Toward Secondary Information Use , 1993, MIS Q..

[10]  Amos Tversky,et al.  A general theory of polynomial conjoint measurement , 1967 .

[11]  G. C. Homans,et al.  Social Behavior: Its Elementary Forms. , 1975 .

[12]  Uriel G. Foa,et al.  Effect of resource class on retaliation to injustice in interpersonal exchange. , 1974 .

[13]  Erik R. Eddy,et al.  THE EFFECTS OF INFORMATION MANAGEMENT POLICIES ON REACTIONS TO HUMAN RESOURCE INFORMATION SYSTEMS: AN INTEGRATION OF PRIVACY AND PROCEDURAL JUSTICE PERSPECTIVES , 1999 .

[14]  Donald F. Cox,et al.  Perceived Risk and Consumer Decision-Making—The Case of Telephone Shopping , 1964 .

[15]  Jasmine Schwartz.  Giving the Web a Memory Cost Its Users Privacy , 2001 .

[16]  Bettina Berendt,et al.  E-privacy in 2nd generation E-commerce: privacy preferences versus actual behavior , 2001, EC '01.

[17]  Joseph Gray Jackson,et al.  Privacy and Freedom , 1968 .

[18]  Wayne D. Hoyer,et al.  Variables affecting perceptions of invasion of privacy in a personnel selection situation. , 1980 .

[19]  Ramnath K. Chellappa,et al.  Personalization versus Privacy: New Exchange Relationships on the Web , 2006 .

[20]  R. Staelin,et al.  A Model of Perceived Risk and Intended Risk-handling Activity , 1994 .

[21]  K. Moorthy.  Market Segmentation, Self-Selection, and Product Line Design , 1984 .

[22]  A. M. Harrell,et al.  An Application of Expectancy Theory to Explain a Manager's Intention to Use a Decision Support System , 1994 .

[23]  M. E. Gordon,et al.  Direct Mail Privacy-Efficiency Trade-offs within an Implied Social Contract Framework , 1993 .

[24]  Geoffry S. Howard,et al.  Discretionary Use of Computers: An Empirically Derived Explanatory Model* , 1991 .

[25]  G. Debreu.  Topological Methods in Cardinal Utility Theory , 1959 .

[26]  Jordan J. Louviere,et al.  Analyzing Decision Making , 1988 .

[27]  V. Vroom.  Work and motivation , 1964 .

[28]  C. Goodwin.  Privacy: Recognition of a Consumer Right , 1991 .

[29]  P. Green,et al.  Conjoint Analysis in Consumer Research: Issues and Outlook , 1978 .

[30]  John Leubsdorf,et al.  Privacy and Freedom , 1968 .

[31]  E. Goffman.  The Presentation of Self in Everyday Life , 1959 .

[32]  Thomas Hill,et al.  Role of efficacy expectations in predicting the decision to use advanced technologies: The case of computers. , 1987 .

[33]  Christian Terwiesch,et al.  Measuring the Frictional Costs of Online Transactions: The Case of a Name-Your-Own-Price Channel , 2003, Manag. Sci..

[34]  S. Jourard.  Some Psychological Aspects of Privacy , 1966 .

[35]  Daniel Robey,et al.  User Attitudes and Management Information System Use , 1979 .

[36]  L. Beach,et al.  Expectancy Theory, Decision Theory and Occupational Preference and Choice. Organizational Research. Technical Report 75-75. , 1975 .

[37]  Paul D. Tolchinsky,et al.  A Survey of Employee Perceptions of Information Privacy in Organizations , 1982 .

[38]  R. Laufer,et al.  Privacy as a Concept and a Social Issue: A Multidimensional Developmental Theory , 1977 .

[39]  R. Luce,et al.  Simultaneous conjoint measurement: A new type of fundamental measurement , 1964 .

[40]  Paul D. Tolchinsky,et al.  Employee perceptions of invasion of privacy: A field simulation experiment. , 1981 .

[41]  Hal G. Gueutal,et al.  A Field Experiment Comparing Information-Privacy Values, Beliefs, and Attitudes Across Several Types of Organizations , 1983 .

[42]  Dale Goodhue,et al.  Supporting users of corporate data : the effect of I/S policy choices , 1988 .

[43]  Gerardine De Sanctis,et al.  Expectancy Theory as an Explanation of Voluntary Use of a Decision-Support System: , 1983 .

[44]  Jordan J. Louviere,et al.  Analyzing Decision Making: Metric Conjoint Analysis , 1988 .

[45]  H. Jeff Smith,et al.  Information Privacy: Measuring Individuals' Concerns About Organizational Practices , 1996, MIS Q..

[46]  L. J. Savage,et al.  The Utility Analysis of Choices Involving Risk , 1948, Journal of Political Economy.

[47]  Paul E. Green,et al.  Conjoint Analysis in Marketing: New Developments with Implications for Research and Practice , 1990 .

[48]  Eric K. Clemons,et al.  Poaching and the misappropriation of information: transaction risks of information exchange , 2004, 37th Annual Hawaii International Conference on System Sciences, 2004. Proceedings of the.

[49]  N. Melone.  A theoretical assessment of the user-satisfaction construct in information systems research , 1990 .

[50]  H. Jeff Smith,et al.  Values, personal information privacy, and regulatory approaches , 1995, CACM.

[51]  Albert H. Segars,et al.  An Empirical Examination of the Concern for Information Privacy Instrument , 2002, Inf. Syst. Res..

[52]  Paul E. Green,et al.  Segmenting Markets with Conjoint Analysis , 1991 .

[53]  Organisation for Economic Cooperation and Development,et al.  Organisation for economic cooperation and development , 1998 .

[54]  Michael J. Stahl,et al.  Modeling effort decisions with behavioral decision theory: Toward an individual differences model of expectancy theory , 1981 .

[55]  M. Culnan,et al.  Information Privacy Concerns, Procedural Fairness, and Impersonal Trust: An Empirical Investigation , 1999 .

[56]  Elizabeth C. Hirschman,et al.  People as Products: Analysis of a Complex Marketing Exchange , 1987 .

[57]  S. Addelman.  Orthogonal Main-Effect Plans for Asymmetrical Factorial Experiments , 1962 .

[58]  Sandra J. Milberg,et al.  Information Privacy: Corporate Management and National Regulation , 2000 .