Essays in information privacy

This thesis explores absence of proficient online privacy markets, where sellers can offer privacy enhanced services to consumers, who value privacy. Over three papers, I provide insight to aspects that hinder these markets and potential ways to remedy them. In the first paper, I contend that the changing nature of transactions in online markets – transactions that include consumers’ personal information – has introduced another aspect of uncertainty: privacy uncertainty. I theoretically explore the relationship among privacy uncertainty and seller and product uncertainty. Since uncertainty is the result of information asymmetry, I delve deeper into the nature of information asymmetry by distinguishing between its pre-purchase and post-purchase aspects and their respective effects on privacy uncertainty. Using lab experiments, I demonstrate that post-purchase information asymmetry leads to higher privacy uncertainty, a result that discredits the contemporary practice of using “notice and consent” in online markets. The second paper explores how sellers can improve the communication of their privacy practices and profit from them. To achieve this I define what good privacy practices mean and describe how to measure the quality of such practices. I theorize that app sellers can make better privacy claims if they also include data that supports their privacy claims and provide information about the practices of other similar app sellers (category-claims). I study these propositions across three experiments and find that category claims lead to greater perception of privacy quality as well as willingness to buy. While prior privacy literature has placed an emphasis on understanding consumer privacy preferences at the time of information disclosure, the last paper explores what happens after the information has been disclosed. In particular, I am interested in understanding consumers’ behavior after they experience a privacy failure, which occurs when consumer’s expectations about collection, use and protection of their personal information are disconfirmed. Using the critical incidence technique, we surveyed 321 individuals who had experienced a privacy failure and found that consumers predominantly react by exhibiting “helplessness”, which can be alleviated by providing a simple recovery mechanisms and privacy controls that enable consumers to add, remove and monitor their collected personal information.Business, Sauder School ofGraduat