Contextualized Communication of Privacy Practices and Personalization Benefits: Impacts on Users' Data Sharing and Purchase Behavior

Consumer surveys demonstrated that privacy statements on the web are ineffective in alleviating users’ privacy concerns. We propose a new user interface design approach in which the privacy practices of a website are explicated in a contextualized manner, and users’ benefits in providing personal data clearly explained. To test the merits of this approach, we conducted a user experiment that compared two versions of a personalized web store: one with a traditional global disclosure and one that additionally provides contextualized explanations of privacy practices and personalization benefits. We found that subjects in the second condition were significantly more willing to share personal data with the website, rated its privacy practices and the perceived benefit resulting from data disclosure significantly higher, and also made considerably more purchases. We discuss the implications of these results and point out open research questions.