Choice Architecture and Smartphone Privacy: There's a Price for That

Under certain circumstances, consumers are willing to pay a premium for privacy. We explore how choice architecture affects smartphone users’ stated willingness to install applications that request varying permissions. We performed two experiments to gauge smartphone users’ stated willingness to pay premiums to limit their personal information exposure when installing new applications. We found that when participants were comparison shopping between multiple applications that performed similar functionality, a quarter of our sample responded that they were willing to pay a $1.50 premium for the application that requested the fewest permissions—though only when viewing the requested permissions of each application side-by-side. In a second experiment, we more closely simulated the user experience by asking them to valuate a single application that featured multiple sets of permissions based on five between-subjects conditions. In this scenario, the requested permissions had a much smaller impact on participants’ responses. Our results suggest that many smartphone users are concerned with their privacy and are willing to pay premiums for applications that are less likely to request access to personal information. We propose improvements in choice architecture for smartphone application markets that could result in decreased satisficing and increased rational behavior.