The Value of Online Information Privacy: An Empirical Investigation

Concern over online information privacy is widespread and rising. However, prior research is silent about the value of information privacy in the presence of potential benefits from sharing personally identifiable information. We analyzed individuals’ trade-offs between the benefits and costs of providing personal information to websites. We found that benefits – monetary reward and future convenience – significantly affect individuals’ preferences over websites with differing privacy policies. We also quantified the value of website privacy protection. Among U.S. subjects, protection against errors, improper access, and secondary use of personal information is worth US$30.49 – 44.62. Finally, we identified three distinct segments of Internet consumers – privacy guardians, information sellers, and convenience seekers. * Marshall School of Business, University of Southern California; ** Department of Information Systems, National University of Singapore. We acknowledge financial support from the Carnegie Bosch Foundation, GSIA, Carnegie Mellon University. We thank Teck H. Ho, and 2002 International Conference on Information Systems referees for valuable comments.