Ignorance is Bliss: The Effect of Increased Knowledge on Privacy Concerns and Internet Shopping Site Personalization Preferences

Ignorance is Bliss: The Effect of Increased Knowledge on Privacy Concerns and Internet Shopping Site Personalization Preferences

Thomas P. Van Dyke (University of North Carolina at Greensboro, USA)
DOI: 10.4018/978-1-60566-210-7.ch015
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Abstract

Studies have shown that people claim that privacy matters to them but then they often do things while browsing that are risky in terms of privacy. The seeming inconsistency between professed privacy concerns and risky behavior on the internet may be more a consequence of ignorance rather than irrationality. It is possible that many people simply don’t understand the technologies, risks, and regulations related to privacy and information gathering on the Web. In this study, the authors conducted an experiment to determine the answer to the following question: If people understood the risks and technology, would that knowledge alter their level of privacy concern and their preferences concerning e-commerce Web site personalization? Results indicate that increased awareness of information gathering technology resulted in significantly higher levels of privacy concern and significantly reduced preferences for Web site personalization. Implications of the findings are discussed.
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Introduction

Individuals are willing to participate in diverse activities online – from emailing friends and looking up personal medical information to purchasing a wide variety of goods and services. While consumers benefit from their activities online, businesses also benefit from information gained while consumers browse. The internet environment allows business to collect and analyze more personal information with greater ease and efficiency than ever before. Firms can use several methods to collect information about visitors to their sites. These include overt methods such as registration forms, web surveys and order forms as well as covert methods including spyware, web bugs and cookies. The information gathered serves as an important input into marketing, advertising, customer service and product-related decisions by on line firms. The information gathered also allows firms to offer personalization (i.e. mass customization) to the web site. This has the potential to benefit both the customer, through added convenience and options, as well as the firm by encouraging increased sales.

However, the consequences of information gathering are not all positive. The ability of firms to gather so much information creates the risk of possible misuse and generates concerns over information privacy among users. These privacy concerns impede e-commerce. The Federal Trade Commission estimates that on-line retail sales were reduced by $18 billion due to privacy concerns in 2002. (Gellman, 2002).

Users claim that privacy is important to them (Westin, 2003). However, they are constantly taking actions that are risky in terms of privacy. Internet users are often required to make tradeoffs, taking actions that sacrifice privacy in return for convenience such as web-site personalization. These actions often appear to be in contradiction of their professed attitudes regarding their personal privacy.

For example, internet users have consistently indicated that they did not want firms to track their web surfing habits (Westin, 2003). However, people routinely accept cookies through their web-browsers by default. According to one study, users rejected fewer than 1% of cookies in over a billion page views (Websidestory, 2001).

There are several possible explanations for the seeming contradictions between user attitudes and actions. According to Kristol (2001) these include:

  • Users know how cookies can collect information and track them but are unconcerned.

  • Users don’t know how cookies can be used to track them.

  • Users have inadequate means to select which cookies to accept so they just give up and select them all.

  • Users assume that the firms collecting the information will protect it and use it discreetly. (not true in all cases)

  • Users assume (incorrectly) that that they are protected by governmental regulations that will prevent Web sites from misusing information about them.

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