How Users Assess Privacy Risks in the Internet of Things: The Role of Framing, Comparing, and Educating

With the advent of the Internet of Things (IoT), it has become increasingly challenging for users to assess the privacy risks associated with consumer products and the continuous stream of user data needed to operate them. In this study, we propose and test three mechanisms with the potential to help users make more accurate assessments of privacy risks. We refer to these mechanisms as framing (i.e., presenting information on the collection and use of user data with or without direct reference to privacy risks), comparing (i.e., presenting a product and the associated information on data collection and use with or without reference to an alternative product), and educating (i.e., augmenting users’ general privacy literacy). To assess these mechanisms in different IoT contexts, we conducted two scenario-based online experiments with reference to a telematics device ( n = 317) and a fitness tracker ( n = 356). In both studies, we find that actual privacy risks as manipulated in the experiment are only moderately related to the privacy risks perceived by users. However, comparing and educating each helped users make more accurate privacy risk assessments. In Study 2, framing and comparing jointly enabled especially users with low privacy literacy to assess privacy risks more accurately. These findings have meaningful implications for key actors in the IoT ecosystem and those regulating it.