Advertisement

Market Reactions to Consumer Concerns

  • Paul H. Rubin
  • Thomas M. Lenard
Chapter
  • 88 Downloads

Abstract

Although the Internet is still very young — commercial use of the medium did not begin to develop until the mid-1990s — market forces are moving rapidly to provide the privacy desired by consumers, in part by eliminating problems of asymmetric information. Perhaps most importantly, firms that do business on the Internet are discovering that there are substantial “reputation” costs associated with adopting information practices that are inconsistent with consumers’ expectations. Firms respond by modifying their practices and by avoiding practices that may not be greeted favorably by their customers.

Keywords

Privacy Policy Market Reaction Wall Street Journal Price Discrimination Audit Firm 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. 94.
    The theoretical argument was made by Benjamin Klein and Keith B. Leffler, “The Role of Market Forces in Assuring Contractual Performance,” 89 Journal of Political Economy 615, 1981. For a summary of the empirical literature, see Kari Jones and Paul H. Rubin, “Effects of Harmful Environmental Events on the Reputations of Firms,” Advances in Financial Economics,2001, edited by Mark Hirschey, Kose John and Anil K Makhija, available online at http://papers.ssrn.com/paper.taf?ABSTRACT_ID=158849.
  2. 95.
    Alec Klein and Shannon Henry, “On Reflection, a Puzzling Ad Campaign,” The Washington Post, March 1, 2001, p. El.Google Scholar
  3. 96.
    David Streitfeld, “On the Web, Price Tags Blur,” Washington Post, September 27, 2000. Amazon denies that it was engaged in dynamic pricing or price discrimination.Google Scholar
  4. 97.
    Paul Krugman, “What Price Fairness?,” New York Times October 4, 2000;Google Scholar
  5. 98.
    Carl Shapiro and Hal Varian, Information Rules: A Strategic Guide to the Network Economy, Cambridge, MA: Harvard Business School Press, Chapters 2 and 3.Google Scholar
  6. 99.
    This and the following two examples are from Jessica Litman, “Information Privacy/Information Property,” 52 Stanford Law Review, 1283–1313, May, 2000, at 1305-6.Google Scholar
  7. 100.
    This and the following two examples are from Daniel J. Solove, “Privacy and Power: Computer Databases and Metaphors for Information Privacy,” p. 27, available online through SSRN.Com, 56–57.Google Scholar
  8. 101.
    Associated Press, “Internet Co. Drops Data Selling Plan,” Feb. 22, 2001. Note that the plan did not sell personally identifiable information.Google Scholar
  9. 102.
    Discussed at numerous places. See for example Diane Anderson and Keith Perine, “Marketing the Double Click Way,” The Standard, March 13, 2000.Google Scholar
  10. 103.
    Will Roger and Gregg Farell, “Investors Dump DoubleClick,” USA Today, February 17, 2000. However, this fall in value was short lived: “Double Click Bounces Back on report,” USA Today, February 25, 2000. We note that FTC investigation of DoubleClick found they had not violated any FTC requirements.Google Scholar
  11. 104.
    Peter Swire, “Markets, Self-Regulation, and Government Enforcement in the Protection of Personal Information,” in Privacy and Self-Regulation in the Information Age, U. S. Department of Commerce, Washington, DC, 1997, http://www.ntia.doc.gov/reports/privacy/selfreg1.htm.Google Scholar
  12. 105.
    “It’s Time for Rules in Wonderland,” Business Week, March 20, 2000; “Towards Digital eQuality — The Second Annual Report of the US Government’s Work Group On Electronic Commerce,” December, 1999.Google Scholar
  13. 106.
    IBM has been running a series of newspaper advertisements featuring a full-page picture of its Chief Privacy Officer, Harriet Pearson. See, for example, The Wall Street Journal June 6, 2001, p. A14.Google Scholar
  14. 107.
    http://www.pandab.org,visited November 13, 2000.
  15. 108.
    Kemba J. Dunham, “The Jungle: Focus on Recruitment, Pay and Getting Ahead: A New Playing Field,” The Wall Street Journal, March 20, 2001.Google Scholar
  16. 109.
  17. 110.
    Found at http://www.truste.org/users/users_lookup.html visited December 22, 2000.
  18. 111.
  19. 112.
  20. 113.
    Bob Tedeschi “Sellers Hire Auditors to Verify Privacy Policies and Increase Trust,” New York Times, September 18, 2000.Google Scholar
  21. 114.
    Downloaded on October 25, 2000 from ZDNet Downloads http://www.zdnet.com/downloads/, a popular source for software, using a search for “cookie”.
  22. 115.
    http://www.doubleclick.net:80/uslcorporate/privacy/opt-out.asp?asp_object_1=&
  23. 116.
    Declan McCullagh, “Prepaid Phones and Privacy, Too,” Wired, March 14, 2001.Google Scholar
  24. 117.
    Some of these are discussed in Don Clark, “Privacy: You Have No Secrets,” The Wall Street Journal, October 23, 2000 and Lorrie Faith Cranor. “Agents of Choice: Too ls That Facilitate Notice and Choice abo ut Web Site Data Practices,” available online from http://www.research.att.com/~lorrie/#publications.Google Scholar
  25. 118.
    GVU’s 7th WWW User Survey, http://www.gvu.gatech.edu/gvu/user_surveys/survey-1998-04/
  26. 119.
    GVU’s 7 th WWW User Survey, http://www.gvu.gatech.edu/gvu/user_surveys/survey-1997-04/
  27. 120.
    Kim Bartel Sheehan and Mariea Grubbs Hoy, “Flaming, Complaining, Abstaining: How online users respond to privacy concerns,” 37 Journal of Advertising, 1999. Google Scholar
  28. 121.
    Jonathan Zittrain, “What the Publisher Can Teach the Patient: Intellectual Property and Privacy in an Era of Trusted Privication, 52 Stanford Law Review 1201–1250. May 2000.Google Scholar
  29. 122.
    For the W3C homepage, see http://www.w3.org. For the list of members, see http://www.w3.org/Consortium/Member/List, visited December 22, 2000, when there were 488 members.Google Scholar
  30. 123.
  31. 124.
    “New Tools to Help Web Surfers Protect Privacy,” Associated Press, June 22, 2000.Google Scholar
  32. 125.
    Elizabeth Weise, “Privacy plug-in will ask: ‘Do you want to go there?’,” USA Today, July 11,2000.Google Scholar
  33. 126.
    See, for example, Lawrence Lessig, “The Architecture of Privacy,” 1998, Online, http://cyber.law.harvard.edu/works/lessig/architecture_priv.pdf.
  34. 127.

Copyright information

© Springer Science+Business Media New York 2002

Authors and Affiliations

  • Paul H. Rubin
    • 1
    • 2
  • Thomas M. Lenard
    • 2
  1. 1.Emory UniversityUSA
  2. 2.The Progress & Freedom FoundationUSA

Personalised recommendations