Affairs marketplace Ashley Madison has added 4 million new users in a move that will surely puzzle most information security professionals. Even security firm AVG says usage is up. How could this be possible after the data breach and such a, um, sensitive topic? Consumers have a short memory as we can see from the fact that people still shop at Target and Home Depot and people still go to see movies produced by Sony.
Psychologist Kathy Seifert also provides some insight:
“with cheating in particular, it can be somebody who isn’t satisfied with their ordinary life and having trouble in their marriage, but sometimes not. Sometimes their just seeking the thrill of the game.”
Some people love to take risks, but in reality risk is reduced after an event due to extra scrutiny on the causes such as safety, but also due to the fact that the odds of two like events happening in the same place are relatively low.
For example, Police allege they discovered skinned cat behind Ming’s BBQ in Doraville, GA. Health inspectors visited the restaurant and rated Ming’s a failing score of 59. Would you eat at Ming’s? Images of food poisoning, death, and being served cat when you ordered dog come to mind. Surprise! Their health score jumped from 59 to 96 in less than two weeks. Under Rational Choice Theory (RCT) you would have greater economic utility dining at Ming’s after they were cited for and cleaned up their health issues. The same goes for airline service or some type of technology service. Fear of previous low health scores, plane crashes, or data insecurity do not fit into RCT since value is maximized by the event.
Many in the information security profession have said that the Ashley Madison IPO is off, their CEO is gone, and they will be sued out of business. This prediction has not happened and we are still waiting for Target and Home Depot to stop posting gains year-over-year after their data breach. Ashley Madison is in good shape from a legal stand point since the class action was filed in the Eighth Circuit. Why is this important? The Seventh Circuit ruled that plaintiffs who experienced no injuries from a data breach could pursue damages. Since the case is in the Eighth Circuit the Remijas v. Neiman Marcus precedent does not apply. Also consider that a judge has ruled that “John Doe” victims must identify themselves. Two strikes against legal action which is Bullish for investors.
Consumers are always seeking to consume and maximize their economic utility. Ashley Madison has continued to deliver on a value proposition and appears to be on track to bring gains to investors in this new class of marketplace.