...while, the same time, consumers voice concerns that their rights and ability to control their personal information in the marketplace are being violated. However, despite the complaints, it appears that consumers freely provide personal data. This research explores what we call the "privacy paradox" or the relationship between individuals' intentions to disclose personal information and their actual personal information disclosure behaviors.

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With increasingly sophisticated technology, the effectiveness of collecting, storing, and analyzing vast amounts of consumer information has certainly increased, especially as related costs have fallen. Marketers who live by the adage "know thy customer" may view this progress as movement toward the desired state where knowledge of customers leads to ultra-efficient communication to exactly the right target audiences about product/service offerings, which perfectly match the needs and desires of those same groups (Moon 2000).

However, as marketers leverage the ability to collect and analyze ever-greater amounts of consumer information, serious concerns have arisen over the potential erosion of personal privacy (cf. Cavoukian and Hamilton 2002; Whiting 2002; Williams 2002). The popular press has featured privacy concerns as major negative result of the "information age," and political forces have sought to transform consumers' felt deprivation into public policy initiatives. Consumers are constantly faced with the not-so-obvious trade-off between the desire for better products and services that are touted to be the result of more detailed customer profiles on the one hand and the privacy encroachment that such disclosure causes on the other.

Yet, for all the concern that people express about their personal information, which could be expected to drive one's intended and actual disclosure, our observations of actual marketplace behavior anecdotally suggest that people are less than selective and often cavalier in the protection of their own data profiles. Few studies have examined this discrepancy between individuals' intentions to protect their own privacy and how they behave in the marketplace. The purpose of this exploratory study is to investigate whether people say one thing (intend to limit disclosure) and then do another (actually provide personal details) during marketing exchanges. To that end, we report the results of two studies that demonstrate the existence of the privacy paradox and suggest that individuals' considerations of risk and trust help explain why it occurs. Additionally, a discussion of public policy is offered, with the goal of stimulating thoughts about how the desires of the public to maintain a sense of privacy may be preserved in an environment where privacy erosion seems inevitable.

BACKGROUND

That people are willing to trade personal information for perceived benefits is no surprise. For instance, a Web site that provides useful data may require the user to register in order to access the information. It is likely that economists and others would utilize an exchange framework to posit that the information the consumer receives from the Web site in this example is clearly of greater value than that of the information provided by the consumer to the site. Yet, this explanation seems less appropriate when we repeatedly witness people giving their phone numbers to clerks while engaged in simple cash transactions at a Sports Authority store. In this case, the benefit may be more difficult to ascertain. As O'Harrow noted in a recent book on surveillance and information collection, consumers "often willingly, even eagerly, part with intimate details of their lives" (2005, p. 54). While this seemingly asymmetric exchange, whereby the consumer receives limited value for providing information to a firm, has been noted (cf. Phelps, Nowak and Ferrell 2000; Han and Maclaurin 2002), few researchers have presented empirical evidence of the phenomenon (Sayre and Home 2000; Spiekermann, Grossklags, and Berendt 2001).

The challenge in investigating actual disclosure and the impact thereon of privacy-related measures is threefold. First, privacy perceptions vary widely across populations and even within specific segments (Archer 1980; Culnan 1995; Nowak and Phelps 1992). A closely guarded secret to one may be the chance for an appearance on The Jerry Springer Show for another. So too, certain domains of life are considered more private than others (Wasserstrom 1978; Phelps, Nowak, and Ferrell 2000). For example, Home and Home (1998) found that consumers were much more sensitive about the use of medical, financial, and family information than they were about their product and brand consumption or their media usage behavior. White (2004) makes the distinction between information, which when disclosed, causes a loss of privacy (control) and that which, when disclosed, causes embarrassment.

A second challenge faced in trying to understand privacy issues and phenomenon is the diversity of measurements used by previous researchers. Measures that have been used when examining privacy include attitudes toward privacy, concern for privacy, privacy-related behavioral intentions, and actual behavior, like disclosing personal information or taking affirmative steps to control information usage. This has resulted in some confusion regarding the implications that can be drawn from the literature from both behavioral and policy perspectives.

For example, large-scale studies, such as those conducted by Alan Westin throughout the 1990s (cf. Westin 1996), measured privacy in terms of "concern" about the current or future state of respondents' privacy. The concern measure provides some information about attitudes, though without dealing directly with the ambiguous nature of the term privacy. The studies by Westin and others (e.g., Smith, Millberg, and Burke 1996) have also examined concern to show that people have a range of attitudes toward privacy, which might either correlate with other factors like satisfaction with merchant offerings (e.g., Home and Home 1997), or which might result from certain antecedent conditions (e.g., Sheehan and Hoy 2000). For instance, Milne and Boza (1999) examined how concern related to trust and developed managerial implications, which suggested that increasing trust mitigated concerns.

While the difficulty in sufficiently measuring privacy attitudes is apparent, other researchers have attempted to look at privacy-related behavioral intentions. Here, the stated willingness to provide information or to take concrete steps to secure more privacy is investigated as a proxy for the actual behavior that consumers exhibit. For example, Schoenbachler and Gordon (2002) assess the willingness to disclose information as dependent upon the level trust in the organization, which is requesting the disclosure. Along a similar line, Bart et al. (2005) attempt to tie privacy, as a component of trust, to behavioral intention. Their construal of privacy, however, differed from other work in that they measure the perception of privacy-related activities on the part of the Web site (e.g., clarity of privacy statement) rather than consumers' attitudes or concerns about privacy.

Finally, research into individuals' actual disclosure behaviors has been far more limited than that measuring concerns, attitudes, or behavioral intentions. Outside of the medical and related health services literature (e.g., Henderson et al. 2002; Potter 2002), studies dealing with methodological issues in data collection (cf. Dillman et al. 1996) and studies in psychology (Jourard 1971a, 1971b; Skotko and Langmeyer, 1977), very few efforts to track actual disclosure behavior are found. In marketing, investigations of actual disclosure behavior and of privacy attitudes and behaviors combined in one study are rare; however, we note two studies that do address these areas. Sayre and Home (2000) examined actual disclosure and found consumers would freely trade personal information in exchange for small discounts at a grocery store. The widespread existence of retail and service loyalty programs indicates this practice covers many categories. In the other study, Spiekermann, Grossklags, and Berendt (2001) measured privacy attitudes and examined online behavior simultaneously, hypothesizing that the degree to which participants respond to information requests in an online shopping environment would be driven by their privacy concerns and preferences. Their study clustered participants into different aggregated privacy profiles based on willingness to provide personal information. In examining the degree to which the clusters differed in their personal information provision when exposed to an online shopping simulation, they found no significant differences in disclosure levels among the different privacy clusters. They did not, however, investigate factors that might explain why different privacy profiles respond similarly in a behavioral context.

CONCEPTUAL FRAMEWORK

In the privacy literature, several studies have focused on consumer willingness to provide information (e.g., Bart et al. 2005; Schoenbachler and Gordon 2002), but no study up to this point has focused on the degree to which these intentions might influence behavior and what other factors might affect the relationship. Even though only a paucity of direct evidence exists, several streams of research have examined consumer privacy and contribute to the development of the theoretical foundation from which the paradox may be explored. While much of the work in privacy has developed from a legal/rights basis...

NOTE: All illustrations and photos have been removed from this article.




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