Consumers are becoming increasingly concerned about data privacy in their interactions with tools that support financial decision-making. The authors of this TFI research project investigate the impact of privacy concerns on consumers’ use of financial support tools by conducting four experiments using a savings calculator tool, a mortgage calculator tool and an investment advice tool.
Our decision making is subject to more pervasive observation than ever due to technologies that companies use to understand our offline and online activities — even before we make a purchase. Our research finds that consumers are particularly averse to being observed while they construct their preferences. Consumers feel that their sense of autonomy is threatened and distort their behaviors significantly in order to evade being observed.
Many of us say we care about our privacy, but often disclose personal information. This asymmetry is called the “privacy paradox”. This phenomenon is only a paradox, however, if we assume people are rational or engage in rational disclosure decision-making. Taking into account our cognitive biases and the way online platforms are designed, it comes as no surprise that our disclosure behavior doesn’t always match our privacy preferences.
