Privacy versus Convenience: Customer Response to Data Breaches of Their Information

47 Pages Posted: 30 Nov 2020 Last revised: 21 Apr 2021

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Pulak Ghosh

Indian Institute of Management (IIMB), Bangalore

Tianyue Ruan

National University of Singapore (NUS) - Department of Finance

Yunqi Zhang

School of Finance, Nankai University; National University of Singapore

Date Written: November 13, 2020

Abstract

Cybersecurity breaches pose a substantial privacy concern in the digital era. We investigate how customers respond to privacy leakage in multiple unexpected data breaches. Difference-in-differences estimates show that digital payments declined by 4.6% ~ 7.5% relative to cash payments immediately after an unexpected data breach in a food delivery platform, but the gap disappeared three months later. Customer entry and exit also exhibit weak, short-lived changes. Additional analyses on bank and online grocery data breaches uncover even weaker direct and spillover effects of data breaches. Our findings imply that the perceived benefit of convenience overweighs the cost of privacy leakages.

Keywords: data breach, convenience, privacy, digital economy

JEL Classification: D12, D18, G29

Suggested Citation

Agarwal, Sumit and Ghosh, Pulak and Ruan, Tianyue and Zhang, Yunqi, Privacy versus Convenience: Customer Response to Data Breaches of Their Information (November 13, 2020). Available at SSRN: https://ssrn.com/abstract=3729730 or http://dx.doi.org/10.2139/ssrn.3729730

Sumit Agarwal

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

Pulak Ghosh

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India

Tianyue Ruan

National University of Singapore (NUS) - Department of Finance ( email )

Mochtar Riady Building
15 Kent Ridge Drive
Singapore, 119245
Singapore

HOME PAGE: http://https://truan.github.io/

Yunqi Zhang (Contact Author)

School of Finance, Nankai University ( email )

38 Tongyan Road, Jinnan District
Tianjin, Tianjin 300350
China

National University of Singapore ( email )

4 Architecture Drive
Singapore, 117566
Singapore

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