The Digital Privacy Paradox and Choice Architecture: Evidence from an Experiment in Fintech

A field experiment built into the rollout of a digital wallet to thousands of MIT students — the MIT digital currency experiment — sheds light on consumer behavior regarding commercial, public and government surveillance. Whereas consumers say they care about privacy, they are willing to relinquish private data quite easily in exchange for convenience, small incentives, or reassuring but irrelevant information. Small costs introduced during the selection of digital wallets by the random ordering of featured options have a tangible effect on the technology ultimately adopted, often in sharp contrast with individuals’ stated preferences about privacy. Key safeguards such as “notice and choice” are unlikely to be effective, as providing more information about privacy trade-offs does not reduce the tendency of consumers to go against their own stated privacy preferences.