Description:
'Notice and Choice' has been the reference framework for how firms elicit data from consumers. This paper investigates distortions in consumer behavior which may limit the ability of consumers to safeguard their privacy using data from a field experiment at MIT. There are three findings. First, the effect small incentives have on disclosure may explain the privacy paradox: People say they care about privacy, but are willing to relinquish private data to firms quite easily when incentivized to do so. Second, small navigation costs have a tangible effect on how privacy-protective consumers' choices are, often in contrast with stated preferences. Third, the introduction of irrelevant, but reassuring information makes consumers less likely to avoid tracking. We discuss implications for the privacy strategy of firms