Investments and Trade-offs in the Economics of Information Security

  • Authors:
  • Christos Ioannidis;David Pym;Julian Williams

  • Affiliations:
  • School of Management, University of Bath, Bath, England, U.K BA2 7AY;Hewlett-Packard Laboratories, Bristol, England, U.K BS34 8QZ;University of Aberdeen Business School, Aberdeen, Scotland, U.K AB24 3QY

  • Venue:
  • Financial Cryptography and Data Security
  • Year:
  • 2009

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Abstract

We develop and simulate a dynamic model of investment in information security. The model is based on the recognition that both IT managers and users appreciate the trade-off between two of the fundamental characteristics of information security, namely confidentiality and availability. The model's parameters can be clustered in a manner that allows us to categorize and compare the responses to shocks of various types of organizations. We derive the system's stability conditions and find that they admit a wide choice of parameters. We examine the system's responses to the same shock in confidentiality under different parameter constellations that correspond to various types of organizations. Our analysis illustrates that the response to investments in information security will be uniform in neither size nor time evolution.