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UNCERTAINTY, IDENTIFICATION, AND PRIVACY: EXPERIMENTS IN INDIVIDUAL DECISION-MAKING

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Date Issued:
2010
Abstract/Description:
The alleged privacy paradox states that individuals report high values for personal privacy, while at the same time they report behavior that contradicts a high privacy value. This is a misconception. Reported privacy behaviors are explained by asymmetric subjective beliefs. Beliefs may or may not be uncertain, and non-neutral attitudes towards uncertainty are not necessary to explain behavior. This research was conducted in three related parts. Part one presents an experiment in individual decision making under uncertainty. EllsbergÂÂ's canonical two-color choice problem was used to estimate attitudes towards uncertainty. Subjects believed bets on the color ball drawn from EllsbergÂÂ's ambiguous urn were equally likely to pay. Estimated attitudes towards uncertainty were insignificant. Subjective expected utility explained subjectsÂÂ' choices better than uncertainty aversion and the uncertain priors model. A second treatment tested Vernon SmithÂÂ's conjecture that preferences in EllsbergÂÂ's problem would be unchanged when the ambiguous lottery is replaced by a compound objective lottery. The use of an objective compound lottery to induce uncertainty did not affect subjectsÂÂ' choices. The second part of this dissertation extended the concept of uncertainty to commodities where quality and accuracy of a quality report were potentially ambiguous. The uncertain priors model is naturally extended to allow for potentially different attitudes towards these two sources of uncertainty, quality and accuracy. As they relate to privacy, quality and accuracy of a quality report are seen as metaphors for online security and consumer trust in e-commerce, respectively. The results of parametric structural tests were mixed. Subjects made choices consistent with neutral attitudes towards uncertainty in both the quality and accuracy domains. However, allowing for uncertainty aversion in the quality domain and not the accuracy domain outperformed the alternative which only allowed for uncertainty aversion in the accuracy domain. Finally, part three integrated a public-goods game and punishment opportunities with the Becker-DeGroot-Marschak mechanism to elicit privacy values, replicating previously reported privacy behaviors. The procedures developed elicited punishment (consequence) beliefs and information confidentiality beliefs in the context of individual privacy decisions. Three contributions are made to the literature. First, by using cash rewards as a mechanism to map actions to consequences, the study eliminated hypothetical bias as a confounding behavioral factor which is pervasive in the privacy literature. Econometric results support the ÂÂ"privacy paradoxÂÂ" at levels greater than 10 percent. Second, the roles of asymmetric beliefs and attitudes towards uncertainty were identified using parametric structural likelihood methods. Subjects were, in general, uncertainty neutral and believed ÂÂ"badÂÂ" events were more likely to occur when their private information was not confidential. A third contribution is a partial test to determine which uncertain process, loss of privacy or the resolution of consequences, is of primary importance to individual decision-makers. Choices were consistent with uncertainty neutral preferences in both the privacy and consequences domains.
Title: UNCERTAINTY, IDENTIFICATION, AND PRIVACY: EXPERIMENTS IN INDIVIDUAL DECISION-MAKING.
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Name(s): Rivenbark, David, Author
Harrison, Glenn, Committee Chair
University of Central Florida, Degree Grantor
Type of Resource: text
Date Issued: 2010
Publisher: University of Central Florida
Language(s): English
Abstract/Description: The alleged privacy paradox states that individuals report high values for personal privacy, while at the same time they report behavior that contradicts a high privacy value. This is a misconception. Reported privacy behaviors are explained by asymmetric subjective beliefs. Beliefs may or may not be uncertain, and non-neutral attitudes towards uncertainty are not necessary to explain behavior. This research was conducted in three related parts. Part one presents an experiment in individual decision making under uncertainty. EllsbergÂÂ's canonical two-color choice problem was used to estimate attitudes towards uncertainty. Subjects believed bets on the color ball drawn from EllsbergÂÂ's ambiguous urn were equally likely to pay. Estimated attitudes towards uncertainty were insignificant. Subjective expected utility explained subjectsÂÂ' choices better than uncertainty aversion and the uncertain priors model. A second treatment tested Vernon SmithÂÂ's conjecture that preferences in EllsbergÂÂ's problem would be unchanged when the ambiguous lottery is replaced by a compound objective lottery. The use of an objective compound lottery to induce uncertainty did not affect subjectsÂÂ' choices. The second part of this dissertation extended the concept of uncertainty to commodities where quality and accuracy of a quality report were potentially ambiguous. The uncertain priors model is naturally extended to allow for potentially different attitudes towards these two sources of uncertainty, quality and accuracy. As they relate to privacy, quality and accuracy of a quality report are seen as metaphors for online security and consumer trust in e-commerce, respectively. The results of parametric structural tests were mixed. Subjects made choices consistent with neutral attitudes towards uncertainty in both the quality and accuracy domains. However, allowing for uncertainty aversion in the quality domain and not the accuracy domain outperformed the alternative which only allowed for uncertainty aversion in the accuracy domain. Finally, part three integrated a public-goods game and punishment opportunities with the Becker-DeGroot-Marschak mechanism to elicit privacy values, replicating previously reported privacy behaviors. The procedures developed elicited punishment (consequence) beliefs and information confidentiality beliefs in the context of individual privacy decisions. Three contributions are made to the literature. First, by using cash rewards as a mechanism to map actions to consequences, the study eliminated hypothetical bias as a confounding behavioral factor which is pervasive in the privacy literature. Econometric results support the ÂÂ"privacy paradoxÂÂ" at levels greater than 10 percent. Second, the roles of asymmetric beliefs and attitudes towards uncertainty were identified using parametric structural likelihood methods. Subjects were, in general, uncertainty neutral and believed ÂÂ"badÂÂ" events were more likely to occur when their private information was not confidential. A third contribution is a partial test to determine which uncertain process, loss of privacy or the resolution of consequences, is of primary importance to individual decision-makers. Choices were consistent with uncertainty neutral preferences in both the privacy and consequences domains.
Identifier: CFE0003251 (IID), ucf:48539 (fedora)
Note(s): 2010-08-01
Ph.D.
Business Administration, Department of Economics
Masters
This record was generated from author submitted information.
Subject(s): Ellsberg
experiments
identification
maximum likelihood estimation
multiple priors
privacy
subjective expected utility
and uncertainty aversion
Persistent Link to This Record: http://purl.flvc.org/ucf/fd/CFE0003251
Restrictions on Access: campus 2011-07-01
Host Institution: UCF

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