The Effect of Online Privacy Information on Purchasing Behavior: An Experimental Study

Companies’ efforts to manage their information practices to produce transparent privacy policies have yielded mixed results. Web retailers detail such practices in their online privacy policies, but most of the time this information remains invisible to consumers. This paper reports on research undertaken to determine whether a more prominent display of privacy information will cause consumers to incorporate privacy considerations into their online purchasing decisions. We designed an experiment in which a shopping search engine interface, Privacy Finder, clearly displays privacy policy information. When such information is made available, consumers tend to purchase from online retailers who better protect their privacy. Importantly, our study indicates that once privacy information is made more salient, some consumers are willing to pay a premium to purchase from more privacy protective websites. This suggests that companies may be able to leverage privacy protection as a selling point.