The Hidden Cost of Accommodating Crowdfunder Privacy Preferences: A Randomized Field Experiment (1408.4194v1)

Abstract: Online crowdfunding has received a great deal of attention from entrepreneurs and policymakers as a promising avenue to fostering entrepreneurship and innovation. A notable aspect of this shift from an offline to an online setting is that it brings increased visibility and traceability of transactions. Many crowdfunding platforms therefore provide mechanisms that enable a campaign contributor to conceal his or her identity or contribution amount from peers. We study the impact of these information (privacy) control mechanisms on crowdfunder behavior. Employing a randomized experiment at one of the largest online crowdfunding platforms, we find evidence of both positive (e.g., comfort) and negative (e.g., privacy priming) causal effects. We find that reducing access to information controls induces a net increase in fundraising, yet this outcome results from two competing influences: treatment increases willingness to engage with the platform (a 4.9% increase in the probability of contribution) and simultaneously decreases the average contribution (a $5.81 decline). This decline derives from a publicity effect, wherein contributors respond to a lack of privacy by tempering extreme contributions. We unravel the causal mechanisms that drive the results and discuss the implications of our findings for the design of online platforms.

• The paper demonstrates that delaying the privacy question post-payment increases transaction completion by 4.9%.
• It uses a randomized controlled trial on a global crowdfunding site to isolate privacy effects from pre-payment priming.
• The findings reveal a trade-off between increased participation and decreased average contributions, guiding better platform design.

Negotiating Privacy in Crowdfunding: A Critical Analysis of Information Control Mechanisms

The paper presented in "The Hidden Cost of Accommodating Crowdfunder Privacy Preferences: A Randomized Field Experiment" investigates the nuanced dynamics of privacy preference management on financial behavior in online crowdfunding platforms. Using a randomized control trial on a prominent global crowdfunding site, the authors explore the consequences of privacy feature provision, revealing complex interactions between user behavior and privacy mechanisms.

Methodology and Key Findings

Utilizing a rigorous experimental design, the researchers implemented a delayed presentation of a critical information control question. This delay—positioned post-payment rather than pre-payment—allowed examination of privacy controls' effects on transactional behavior without the confounding priming effect of privacy concerns prior to contribution decisions. Through this experiment, the paper elucidates two principal outcomes: an increase in the probability of transaction completion by 4.9% and a reduction in average contribution by $5.81.

Noteworthy is that these effects reflect competing forces: the comfort provided by privacy controls encouraging contributions, contrasted with the tendency for larger donations to be suppressed in the face of heightened publicity. Thus, the paper accentuates how privacy perceptions influence transaction willingness and amount, evidencing an intricate balance that platforms must navigate between providing transparency and respecting confidentiality.

Implications of Findings

The implications of these findings are manifold, particularly for platform designers and crowdfunding campaign organizers. Key insights suggest that privacy features, while fostering comfort for some users, inadvertently trigger cautious behavior among others when exposure outweighs privacy assurances. This insight is pivotal for platform operators who must strategically decide the visibility of transactions to optimize user engagement and contribution magnitude.

The paper further contributes to the greater discourse on privacy, social influence, and reputation in digital environments. It challenges the notion that enabling user-controlled privacy equates to enhanced engagement—a principle often assumed in privacy-security literature—indicating the potential for counterintuitive outcomes when such features prime users with concerns over visibility and scrutiny.

Speculative Future Directions

The research opens avenues for future inquiries, such as examining the effects of information control mechanisms across different crowdfunding categories or platforms with varied user base demographics. Additionally, further exploration into the granularity and presentation of privacy options could provide deeper insights, potentially revealing optimal configurations that satisfy user privacy expectations while enhancing participatory engagement. It would be particularly interesting to explore whether findings extend to other financial transactions, such as equity-based crowdfunding or traditional e-commerce contexts, where the stakes and social implications differ.

Conclusion

This paper underscores the importance of nuanced privacy negotiations in digital transaction environments, illuminating the complex interplay between user expectations and behavior in the field of online crowdfunding. Its robust methodological approach and significant findings provide critical insights for both academia and industry, contributing significantly to the ongoing dialogue and informing the design of user-centric, privacy-respectful digital platforms. The work compellingly illustrates that accommodating privacy preferences not only involves user-centric design considerations but also requires a profound understanding of the psychological and behavioral dynamics at play.