The Privacy Paradox: The Case of Secondary Disclosure

This paper examines the effect of privacy concerns on purchase likelihood. In many consumer-seller relationships, consumers are required to provide personal information to marketers in order to get better service. The law requires that marketer provide a statement of their privacy policies to consumers. Secondary disclosure is a key aspect of privacy policies. Consumers are concerned about giving up privacy, but the impact of such concerns on purchase behavior is unclear. By integrating several marketer-controlled variables like price, product, and channels with a marketer’s secondary disclosure policy, the study measures the relative importance of the latter along with the effects of secondary disclosure and internet attitudes. The results show that secondary disclosure attitudes influence the weight of secondary disclosure policies in purchase situations. The results also indicate that price sensitivity is influenced by secondary disclosure policies. The clear implications are that privacy concerns do matter and that privacy policies and marketing strategies cannot be set in isolation of each other. The findings are discussed in relation to prior research on privacy and future research directions. Statistical techniques used in the paper include structural equation models, conjoint analysis, and simultaneous equation regression.