An Empirical Investigation of the Antecedents and Consequences of Privacy Uncertainty in the Context of Mobile Apps

When using digital goods that extensively collect user information, privacy uncertainty, which is consumers' difficulty in assessing the privacy of the data they entrust to others, is a major concern. We extend the existing literature on uncertainty in online marketplaces by incorporating privacy uncertainty, and we distinguish among three subdimensions of privacy uncertainty-namely collection, use, and protection. We subsequently theorize and empirically test the antecedents and consequences of this new construct in the context of mobile apps. Consistent with economic theory, we argue that because consumers possess less information than the app seller as a result of the presence of hidden characteristics and hidden action, privacy uncertainty is evoked. Using the factorial survey method, we test our theoretical model in the context of buying a mobile app. The results show that privacy uncertainty significantly influences potential users' intention to use an app above and beyond their uncertainty about the seller and the product. Privacy uncertainty also affects the perceived risk associated with using an app and the price consumers are willing to pay for it. In addition, we find that privacy uncertainty is driven by the uncertainty about privacy practices in regard to the collection, use, and protection of data collected at the time of downloading the app-and more important, the data collected while the app is being used. The results of another factorial survey study suggest that privacy uncertainty is distinct from seller and product uncertainties and has unique drivers. The results of a survey of current users of existing mobile apps indicate that the effects of privacy uncertainty extend to the postadoption stage, where it remains a strong influencer of continued use intentions and perceived risk.