The Elusive Value of Privacy - Exploring the Gap Between WTP & WTA

Abstract

Purpose: The main purpose of this master’s thesis is to examine the factors influencing the gap in WTA and WTP valuations of personal data online.

Research problem: Many tech companies profit from collecting user data, but users often don't grasp the true value of this data. A substantial gap exists between what consumers will pay to protect their data and what they demand as compensation for sharing it, indicating a lack of clear market pricing for personal data. This hinders informed decision-making and ethical practices.

Methodology: This master’s thesis applies a quantitative approach with a focus on applying previously existing research to the findings. A quantitative survey was distributed to 300 participants where we enquired about topics relating to willingness to pay (WTP) and willingness to accept (WTA). The answers were then used to create a dataset that was then analysed using a combination of ANOVA-, and t-test analyses to determine whether the hypotheses were supported.

Findings: Key findings reveal a significant WTP-WTA gap for sensitive data, indicating stronger feelings of ownership, but no gap for less sensitive browsing information. Demographic factors did not significantly influence valuations, but the research supports theories like the endowment effect, loss aversion, privacy paradox, and psychological ownership in explaining valuation differences.

Implications: This research has key implications for various stakeholders. For businesses, understanding the factors influencing the WTP-WTA gap can guide ethical and transparent data practices. For policymakers, it underscores the need for robust privacy regulations and consumer empowerment. For researchers, it contributes valuable empirical evidence and highlights avenues for further exploration.

Keywords: Willingness to Accept, WTA, Willingness to Pay, WTP, Endowment Effect, Loss Aversion, The Privacy Paradox