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Individual Privacy Empowerment: Exploring the trade-offs between Information Sensitivity and Compensation

To provide personalized services and remain competitive, many online companies depend on individual disclosure of personal information. An emerging common theme, in the quest for privacy solutions, is the idea to empower individuals to control the management of their personal information. This study proposes a third-option design that seeks to empower users when signing up for an online service. We also measure individual privacy empowerment in a 2*2 experimental design study (reward/utility-limit mechanism to high/low sensitivity information context) using the proposed third-option design. Results from the multigroup analysis indicate that respondents prefer a reward mechanism over a utility-limit mechanism when asked to disclose less sensitive data. However, the utility-limit mechanism is preferred in the highly sensitive group indicating that a simple linear relationship does not exist between monetary rewards and information sensitivity. Theoretical and practical implications are discussed.