Consumer Preferences for Personal Data Protection in Social Networks: A Choice Modelling Exercise

Abstract

In this paper we focus on the data collection activities of social networks, such as Facebook, Twitter and Instagram. We use choice modelling (mixed logit) techniques on a recent and rich sample of German social network users to assess and quantify their willingness to accept (WTA) the use of their data in exchange for better targeted advertisement. We find that German social network users do value privacy and they are not willing to trade their privacy for better targeted ads. We also find that most respondents were not aware of what the social network could do with their data.

Keywords: Choice Modelling, Data, Mixed Logit, Privacy, Valuation, Willingness to Accept, Targeted Advertising

JEL Classification: C35, D80, M37