UNDERSTANDING PRIVACY PARADOX: AN EXPERIMENTAL APPROACH TO STUDY PRIVACY CONCERNS AND ACTUAL DISCLOSURE AMONG APP USERS

Abstract

ABSTRACT Consumers increasingly protest invasions of privacy by digital applications and platforms, yet they habitually reveal more information than their disclosure intent. This paradoxical behavior has been explained using rational and irrational reasons (cognitive biases and heuristics), but they have been essentially conjectural. Thus, in this research, we empirically verify the existence of the privacy paradox and test four such reasons using quasi-experiments: privacy calculus as a rational explanation, information asymmetry as part of bounded rationality, bandwagon effect as a cognitive bias, and trust as a decision-making heuristic. A dummy app was developed to collect data from 594 mobile application users. The existence of the privacy paradox was tested using regression between privacy concern and actual disclosure. Following this, the reasons for the privacy paradox were tested using ANOVA. We concluded that privacy paradox exists in the defined sample, and the two reasons that explain the privacy paradox are information asymmetry and the peanut effect.