Privacy Concerns and Internet Use – A Model of Trade-off Factors

In this paper we report on the development and validation of a model that assesses the tradeoffs in the delicate balance between the perceived personal benefits and privacy costs associated with Internet use in conducting e-commerce transactions. The model assessment uses Structural Equations Modeling (SEM) with LISREL. Exploratory Factor Analysis (EFA) and Confirmatory Factor Analysis (CFA) were used to develop and validate the instrument involving two pilot studies and a final survey consisting of 301 individuals. The results indicate that trust influences decisions to engage in e-commerce transactions. Also, when personal interest and perceived ability to control surrendered personal information outweigh privacy concerns and perceptions of vulnerability, individuals are encouraged to use the Internet for e-commerce purposes. The findings are important for a number of reasons including their general support for the arguments made by researchers who have advocated the need to creating “procedural fairness” with respect to information disclosure.