Losing privacy versus losing choice: How consumers react to different costs of personalization

Abstract

This research investigates whether consumers anticipate any negative financial consequences arising from personalization practices, and examines how individuals respond to messages about its financial welfare implications, to see what factors increase blame toward firms for the impact their tactics can have on vulnerable populations. Results from a pilot study show that while privacy risks of personalization are highly accessible, few consider its potential to influence spending behavior. In addition, experimental studies reveal that individuals are more likely to blame firms for increases in teen consumer spending when they learn how online tactics limit and determine consumer choices, compared with when messages focus on firm's use of personal information. Additional studies also introduce a moderator for this effect. Overall, this research highlights limitations in consumers' ability to consider consequences of personalization, and provides guidance for advocates on how to better educate the public about potential issues associated with online marketing tactics.