An Experimental Study on Buyer Behavior in the Presence of a Privacy Risk Open Access

Abstract

As online transactions have become increasingly common practice, firms have invested in the search for personal data in the hope that it will give them a competitive edge. This demand for personal data is met with a concern for personal privacy amongst consumers. I examine this concern by understanding the effects of privacy risks on buyer behavior. Utilizing a posted offer market, my experiment exposed buyers’ personal information for any buyer who completed a transaction. Specifically, buyer “money values” were given to sellers for any buyer who purchased a good. The results show a significant difference in buyer behavior in the presence of a privacy risk. When looking at the market as a whole, effects on market convergence were inconclusive. 

Table of Contents

1. Introduction   ……………………………………………………………………………………..1

2. Literature Review.………………………………………………………………………………4

3. Methods………………………………………………………………………………………..11

4. Results…………………………………………………………………………………………19

5. Discussion……………………………………………………………………………………..29

6. Conclusion…………………………………………………………………………………….35

7. References……………………………………………………………………………………..38

 

 

 

Table 1: Paired t-test Results of the Opt-Out Rate Before and After the Treatment…………….21

Table 2: Paired t-test Results and Summary Statistics of Rejected Profit Before and After the Treatment................25

Table 3: OLS Regression on Likelihood of Opting Out and Highest Rejected Surplus in Presence of Treatment and Survey Responses….26

Table 4: OLS Regression on Convergence Coefficient in the Presence of Increased Information...........................28

 

Figure 1: Total Number of Buyers who Opted Out Per Period………………………………….22

Figure 2: Average Rejected Profit Per Round…………………………………………………...24

Figure 3: Average Convergence Coefficient…………………………………………………….27

About this Honors Thesis

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School	Emory College
Department	Economics
Degree	B.A.
Submission	Honors Thesis
Language	English
Research Field	Economics, General
Keyword	Experimental Economics
Committee Chair / Thesis Advisor	Lanier, Kelli, Emory University Rosensweig, Jeffrey, Emory University O’Connell, Stephen , Emory University

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