A market-based rationale for the privacy paradox

Abstract

Moving beyond the current focus on the individual as the unit of analysis in the privacy paradox, this article examines the misalignment between privacy attitudes and online behaviors at the level of society as a collective. I draw on Facebook’s market performance to show how despite concerns about privacy, market structures drive user, advertiser and investor behaviors to continue to reward corporate owners of social media platforms. In this market-oriented analysis, I introduce the metaphor of elasticity to capture the responsiveness of demand for social media to the data (price) charged by social media companies. Overall, this article positions social media as inelastic, relative to privacy costs; highlights the role of the social collective in the privacy crises; and ultimately underscores the need for structural interventions in addressing privacy risks.