Which Privacy Policy Works, Privacy Assurance or Personalization Declaration? An Investigation of Privacy Policies and Privacy Concerns

Abstract

This study focuses on two specific privacy policies, namely privacy assurance and personalization declaration. Specifically, we investigate how these distinct privacy policies affect customers’ privacy concerns and subsequent purchase responses. We have developed a conceptual model that addresses the independent effects of privacy assurance and personalization declaration, as well as the mechanism (i.e., privacy concerns) of these effects. Our model is grounded in motivation theory and supported by a field experiment and a controlled experiment. Our study demonstrates that privacy assurance that claims security protection negatively affects customers’ purchase probability and purchase amount. By contrast, personalization declaration that addresses personalized benefits positively affects customers’ purchase probability and purchase amount. Privacy concerns significantly mediate the negative effects of privacy assurance on purchase responses and the positive effects of personalization declaration on purchase responses. Overall, our findings inform managers of how to deploy privacy policies to reduce customers’ privacy concerns and boost purchase responses.