An analysis of federal policy on Internet consumer privacy and a study of the relationship between privacy, information, trust, and valuation.

Abstract

Recent regulatory, judicial, and political action has reopened the question of how online consumer privacy from private organizations should be regulated in the United States. This paper analyzes the existing policy of the federal government (particularly of the Federal Trade Commission) regarding online privacy to determine if this policy has met its goals and the strengths of weaknesses of current policy. This paper also presents the execution and analysis of an empirical survey, motivated by the aforementioned policy analysis, to understand the relationships between privacy, the trust that individuals place in parties providing privacy assistance via privacy information aids, and the value that individuals place in privacy information aid provision. Results of this survey demonstrate that 1.) individuals are more trusting of third party providers of privacy information aids than first party or commercial website providers of privacy information aids; 2.) the trust that individuals have of a privacy information aid provider is not significantly impacted by the involvement of federal oversight; and 3.) individuals are unwilling to directly pay for privacy information aids. Finally, these analyses inform the discussion of three policy alternatives presented in an attempt to address the central policy question of this paper: are there actions that federal policymakers can take to promote the provision and use of privacy information aids?