When the secret's out....

Photographer: Carl Court/Getty Images

Ashley Madison Hack: 8 Questions and Slightly Fewer Answers

Megan McArdle is a Bloomberg View columnist. She wrote for the Daily Beast, Newsweek, the Atlantic and the Economist and founded the blog Asymmetrical Information. She is the author of "“The Up Side of Down: Why Failing Well Is the Key to Success.”
Read More.
a | A

The data from Ashley Madison -- a "dating" site where married people can arrange affairs -- appears to have been posted online, after the company refused to capitulate to hackers who wanted it shut down. Naturally, the social media world has been captivated by this story. So have I.

I won't dwell on the morality of cheating on your spouse, or the morality of posting the database online for people to peruse, or indeed, the morality of perusing the database to see what your spouse, co-workers, boss, best friend or Great Aunt Rita have been up to. I'll focus on the economics: what this case tells us about markets, operations and the business of blackmail. There are a few worthy puzzles here.

  1. When was the game-theoretical optimal time to tell your spouse that you had used Ashley Madison? In hindsight, the correct time to tell them was right before news of the hack leaked. Failing that, the right time to tell them was immediately after it leaked, in mid-July. The worst time to tell them is, of course, right after your spouse has texted demanding to know why your e-mail address was in that database. But customers had to make the decision without benefit of hindsight. So when should they have fessed up? 

    My considered opinion is that after a week, it looked likely that the hack was real and that the company had no intention of giving in to hacker demands. So that would have been a good time to come clean. If you are an Ashley Madison customer who has not yet confessed, the correct time is obviously right now, before the database goes online in a more easily searchable form. Because I promise you, it's going to. And yes, your spouse is going to search for your e-mail.

  2. Why didn't the company shut down? I think it's fair to say that Ashley Madison's questionable business model became a lot more questionable as soon as the public realized how risky it would be to sign up. In fact, the whole business of using the Internet to find the kind of sex you really don't want the neighbors to know about is looking a little bit shaky. In the old days of partners meeting in person to do things that could destroy their marriages or reputations, you had a certain amount of protection, simply because everyone else involved might have had as much to lose as you did. Online sites introduce third parties who can gleefully tell the neighbors that you like to dress up as a monster while a dominatrix reads you bedtime stories.

  3. Given this, what was the gain in refusing to capitulate to the hackers? The company caused great trauma to the customers, for no great gain to itself. The best I can work out is that the company seems to have believed that they could prevent the release of the data. Given that the full force of the U.S. government couldn't keep Edward Snowden or Julian Assange from disseminating its data, that seems daft.

  4. What motivated the hackers' demands? When Adult Friend Finder was hacked, the hackers asked for money. These hackers seem to be more -- well, "altruistic" does not really seem to be the right word. But their goal seems to have been getting Ashley Madison to stop doing what it was doing, not to gain money for themselves. They went to a lot of trouble to achieve that end, and this interests me, though I confess, I do not have an explanation. They can't have thought that by shutting down Ashley Madison, they would be putting an end to adultery.

  5. Was Ashley Madison even in the business of promoting adultery? At Fusion, Kash Hill quotes Rob Graham of Errata Security saying "It’s about 28 million men to 5 million women in the account list, but essentially all men for credit card transactions."  That's a massive skew compared to other dating sites. Now, maybe Ashley Madison was running a sort of perpetual Ladies' Night so that the women never had to pay. But even so, the disparity between the number of men and women suggests that Ashley Madison's core product was not actually extramarital liaisons, but fantasies -- subscribing to the site let you hope that you might get to have an affair. Which is yet another reason that the business model was done the day their data was hacked. What a buzzkill. Straight guys aren't going to fantasize about joining a site full of dudes.

  6. What does the disparity in the genders say about men and women? The old saw that women want relationships while men want casual sex is frequently disputed by feminists, who point out that women have long been penalized for seeming to want casual sex. But here's a site that specializes in attachment-free sex that, theoretically, no one will know about. And it appears that, to a first approximation, its only actual customers were men. 

    Economists like to differentiate between "signaling" -- presenting an image that you think will get you what you want -- and "revealed preference," when you act to get what you actually want. Married women seem to be revealing a strong preference for not having affairs with men they meet over the Internet.

    Now, that's not to say that women don't want to have affairs, or even that they don't have affairs. Women may simply find it easier to find a low-risk partner. But that itself tells us something, which is either that many more men than women want to cheat (or at least see what their options are for doing so), or that more men than women are willing to have no-strings affairs with married people. This may be innate, or it may be culturally conditioned, but either way, it seems to be pretty powerful. It's definitely not evidence for feminists who wanted to show equality in casual sex drive.

  7. Can you breathe a sigh of relief if your spouse's e-mail isn't there? Nope. Many probably had the common sense not to use their real e-mail address. And some just cheat the old-fashioned way.

  8. Where do we go from here? I can imagine something like the Adult Friend Finder hack as a step toward the acknowledgment that hey, there are a lot of kinky people out there, and we shouldn't care so much about the breathtaking variety of things that people like to do in the bedroom. I'm skeptical that the Ashley Madison hack could prompt similar reflections about adultery, especially on the part of angry spouses. That is the future: many revelations, some of which will change the way we think and others of which will not prompt us to do much thinking. It's a unique moment in human history, but it may also signal a return to the bottled-up inner lives that people had when everyone lived in small towns. The information age could end the age of individual privacy -- and the liberal revolution that came with it.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author on this story:
Megan McArdle at mmcardle3@bloomberg.net

To contact the editor on this story:
Philip Gray at philipgray@bloomberg.net