The paper develops a framework (1) to distinguish between the unique and shared dimensions of privacy and security concerns, (2) to examine the impact of privacy and security concerns on the trust-discount tradeoff as moderated by frugality disposition, and (3) to investigate the impact of personality on online privacy and security concerns. We use Utility Theory and its extension, Prospect Theory, to argue that frugality modifies the perception of risk as depicted in privacy and security concerns and monetary gains from discount in the trust-discount tradeoff. We develop the conceptual model to show the role of privacy and security concerns and the moderating role of frugality in trust-discount tradeoff, as well as the role of personality as the antecedents of privacy and security concerns. Data collected from lab experiments are used to test the model using the structural equation modeling approach. The study is one of the first to study the role of frugality in trust-discount tradeoff. It is also an early attempt to analyze the similarities and dissimilarities between the dimensions of security and privacy concerns. Our findings suggest that frugality plays an important role in moderating the impact of security concerns in trust-discount tradeoff. On the theoretical side the paper adds to the trust-privacy literature and to the field of psychology by studying the role of frugality and personality in relation to privacy and security concerns. The tradeoff of trust-discount is an area that is not adequately studied. This paper adds insight about this tradeoff. The study has practical implications by showing that while offering discount may counter consumers’ privacy concern, it does not reduce the security concern of frugal consumers. Little known websites with low trust perception will not survive by just offering discounts. They need to invest in creating social capital in the form of increased trustworthiness.
Bansal, Gaurav and Zahedi, Fatemeh “Mariam”, "Trading Trust for Discount: Does Frugality Moderate the Impact of Privacy and Security Concerns?" (2010). AMCIS 2010 Proceedings. 417.