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Paper Number

2327

Paper Type

Complete

Description

Transparency is viewed as an essential prerequisite for consumers to make informed privacy decisions in digital markets. However, it remains an open research question whether and when individuals actually prefer transparency about privacy risks when given a chance to avoid it. We investigate this question with a randomized controlled online experiment based on an Ellsberg-type design, where subjects repeatedly choose between risk and ambiguity while facing the threat of an actual disclosure of their personal data. We find empirical support for ambiguity attitudes as a novel behavioral mechanism underlying people's transparency choices in privacy contexts. In particular, we find that most individuals avoid ambiguity and prefer transparency for low likelihood privacy losses. However, this pattern reverses for high likelihood losses and when subjects perceive data disclosure as a gain. Most notably, a significant share of people seek ambiguity and thus prefer to avoid transparency when facing high likelihood privacy risks.

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Dec 12th, 12:00 AM

Privacy Risks in Digital Markets: The Impact of Ambiguity Attitudes on Transparency Choices

Transparency is viewed as an essential prerequisite for consumers to make informed privacy decisions in digital markets. However, it remains an open research question whether and when individuals actually prefer transparency about privacy risks when given a chance to avoid it. We investigate this question with a randomized controlled online experiment based on an Ellsberg-type design, where subjects repeatedly choose between risk and ambiguity while facing the threat of an actual disclosure of their personal data. We find empirical support for ambiguity attitudes as a novel behavioral mechanism underlying people's transparency choices in privacy contexts. In particular, we find that most individuals avoid ambiguity and prefer transparency for low likelihood privacy losses. However, this pattern reverses for high likelihood losses and when subjects perceive data disclosure as a gain. Most notably, a significant share of people seek ambiguity and thus prefer to avoid transparency when facing high likelihood privacy risks.

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