Trust, Risk and Economic Benefits in Online Environments

Lack of trust is identified as one of the main constraints on online environments, particularly in terms of consumer protection. Although the elements that contribute to building trust can be identified in broad terms, there are still many uncertainties in defining and establishing trust in online environments. This paper investigates these uncertainties by studying the relationship between trust and the risk perceptions of users. We discuss issues such as trust as an economic good, risks to procedural fairness, and the relationship between the two. We posit that without an organizational policy governing fair use of personal information, organizations face the risk that information used inappropriately by a single employee or by a single department can have negative consequences for the entire firm. We stress the need for organizations to consider user perceptions of risk when establishing trust with their customers, and we show that economic decision-making in online environments without consideration of trust and risk is not likely to result in optimal choices.