Knowledge of Online Security Risks and Consumer Decision Making: An Experimental Study

When the precise risk probability or consequence is not known, as is the case with many online security risks, it is not clear how people judge and respond to such risks. In this research, we study the impact of e-commerce consumers´ knowledge of online security risks on their risk evaluation and purchase intentions. Based on research in the decision theory field, we categorize a person´s knowledge of a risk as falling under one of four states: known certainty, known uncertainty, unknown uncertainty, and unknowable uncertainty. Following a pilot experiment to test and refine the experimental design, a between-subject experiment is conducted with the four knowledge states as treatments among 160 subjects. Results suggest that willingness to pay and intention to purchase vary systematically under different knowledge conditions. Statistical analysis of the results provides further support for the research model and hypotheses.