The Privacy Paradox in the Data-Driven Marketplace: The Role of Knowledge Deficiency and Psychological Distance

The current digital marketplace maneuvered by big data lures consumers to disclose information that is private, while they express concern about revealing personal information. The privacy paradox describes the unexpected behavior of people who disclose personal information in spite of being concerned by their privacy. In this paper, we explain the privacy paradox in the data-driven digital marketplace context. We take two related but different routes to expound the privacy paradox. Firstly, using the Theory of Incomplete Information (TII) we argue that, knowledge deficiency of consumers due to incomplete information impedes them to make a rational decision. Secondly, using the Construal Level Theory (CLT) we explain how abstract and psychologically distant privacy values are disparaged over more tangible and psychologically proximal shopping benefits. Our study proposes privacy behavior is not merely an outcome of a trade-off, but a decision process that is influenced by limited knowledge and psychological distance.