We estimate the value of online privacy with a differentiated
products model of the demand for Smartphone apps. We study the apps market
because it is typically necessary for the consumer to relinquish some personal
information through “privacy permissions” to obtain the app and its benefits.
Results show that the representative consumer is willing to make a one-time
payment for each app of $2.28 to conceal their browser history, $4.05 to conceal
their list of contacts, $1.19 to conceal their location, $1.75 to conceal their
phone’s identification number, and $3.58 to conceal the contents of their text
messages. The consumer is also willing to pay $2.12 to eliminate advertising.
Valuations for concealing contact lists and text messages for “more experienced”
consumers are also larger than those for “less experienced” consumers. Given the
typical app in the marketplace has advertising, requires the consumer to reveal
their location and their phone’s identification number, the benefit from
consuming this app must be at least $5.06.
By Scott Savage and Donald M. Waldman
Source and read the full paper:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2341311
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