Polarization or Bias: Take Your Click on Social Media

A major policy concern emerging in recent years is whether social media platforms, driven completely by profit motivations, create divisions within society and inject bias into their user base. A related question is: How should a policymaker intervene if these allegations prove to be true? In this study, we set up a microeconomic model to study whether a platform’s profit motivation may indeed compel it to adopt a user-targeting strategy that injects bias and creates polarization. We then examined how a policymaker might intervene and whether there are unintended consequences of such interventions. In doing so, we discovered an interesting duality between polarization and bias—both can add to the platform’s coffers but might act as substitutes in its profit function. If policymakers try to crack down on polarization, it could end up making the platform switch to bias instead. Finally, we examined the role of public awareness in moderating the platform’s desire for profit. Our results provide broad insights into a platform’s incentives and contribute to the public debate on this issue.