Privacy in E-Commerce : Stated Preferences vs. Actual Behavior*

In times of ubiquitous electronic communication and increasing industry pressure for standard electronic authentication, the maintenance of privacy (the “right to be let alone”) becomes a subject of increasing concern. The possibility of a “transparent human” appears most obvious in electronic commerce, due partly to the large amounts of data available, partly to the high payoffs expected from using this data for marketing purposes. Questionnaire-based surveys suggest that many people strongly oppose this trend. For example, 75% of the German Internet users surveyed in [5] professed to be at least sometimes afraid that their privacy may be compromised when surfing the Internet. 60% had avoided a website it in order to protect their privacy, and 47% sometimes provided false data. Similar results have been obtained in other countries [8]: 30-40% of online users admit to regularly lying online when asked about their personal habits and preferences. The use of obvious (“Donald Duck”) and less obvious aliases is commonplace. The integrity and efficiency of commercial websites' data protection measures is widely doubted. Given these widespread concerns about personal privacy in a networked world, it is commonly assumed that people systematically draw their consequences. Privacy enhancing technologies (PETs) such as P3P build on the idea that Internet users reflect on privacy statements, are restrictive in what they reveal, to whom, and under what circumstances—in short, that they act in accordance with their privacy preferences. However, as our study will show, this is by far not always the case. In this paper, we describe results from a large-scale online shopping experiment. They suggest that, given the right circumstances, online users easily forget about their privacy concerns and communicate even the most personal details without any compelling reason to do so. This holds in particular when the online exchange is entertaining and appropriate benefits are offered in return for information revelation—circumstances easily created by second generation agent technologies and embodied interface agents. Privacy statements have no impact on most users' behavior. In concluding, we discuss some possible reasons for this discrepancy between stated preferences and actual behavior. We also suggest ways how to help users better align their actions with their goals