The John M. Olin Center

Paper Abstract

Untitled Document

81. Dan Svirsky, Why Are Privacy Preferences Inconsistent?, 01/2019.

Abstract: There is a widespread intuition that people are inconsistent about protecting their privacy. People are angry about corporations collecting their data but often do not change simple default settings in their apps. This paper presents evidence from an experiment on data sharing. The results both document this paradox and provide evidence for a novel explanation: information avoidance. Even people who are willing to pay nearly an hour's worth of wages for privacy are also willing to give away their data for small money bonuses if given a chance to avoid seeing the privacy consequences of their choices. In an online experiment, participants must decide whether to share their Facebook profile data with a survey-taker in exchange for a higher payoff. When people make a direct tradeoff between 50 cents and privacy, roughly 64% refuse to share their Facebook data. However, when participants face a veiled tradeoff and must “click to reveal” to learn whether privacy is free or costs 50 cents, only 40% end up refusing to share their data for 50 cents. Consistent with information avoidance driving these differences in apparent valuations of privacy, 58% of participants did not click to reveal to learn which payment option was associated with privacy. In a Placebo Veiled Tradeoff treatment, participants choosing between two money bonuses did not engage in the same avoidance behavior. The paper also presents evidence on how this pattern changed before, during, and after the Cambridge Analytica Facebook scandal. While privacy valuations in the direct tradeoff treatment were unchanged, even at the height of the scandal, the veiled information treatment became less effective. One month later, the results returned to their pre-scandal values, and the treatment was as effective as before. The findings show that even people who would otherwise pay for privacy seem able to exploit strategic ignorance – keeping their head in the sand – and deal away their data for small amounts of money. The findings also suggest that privacy regulations aimed at giving people more information about data choices will be difficult to execute effectively.