Data Redundancies and Cyber Attacks

85 Pages Posted: 15 Apr 2024

See all articles by Rodney Garratt

Rodney Garratt

University of California, Santa Barbara (UCSB)

Linda Schilling

Washington University in Saint Louis, John M. Olin Business School

Multiple version iconThere are 2 versions of this paper

Date Written: March 31, 2024

Abstract

We provide an economic analysis of how data redundancies via multiple
and partial backups as well as data segmentation affect private and socially
optimal investment in data security against cyber attacks. Redundancies
cause free-riding so that in equilibrium overall data security against cyber
attacks is below socially optimal levels. A financial market infrastructure
that observes all of the data can choose its data security level to improve
upon the private outcome, but cannot induce a response from the private
banks that generates the socially optimum level of security. Regulation is
required to obtain a social optimum.

Keywords: cyber attacks, data security, backups, free riding, redundancy, DLT

JEL Classification: D8, G28

Suggested Citation

Garratt, Rodney and Schilling, Linda, Data Redundancies and Cyber Attacks (March 31, 2024). Available at SSRN: https://ssrn.com/abstract=4780362 or http://dx.doi.org/10.2139/ssrn.4780362

Rodney Garratt

University of California, Santa Barbara (UCSB) ( email )

South Hall 5504

Linda Schilling (Contact Author)

Washington University in Saint Louis, John M. Olin Business School ( email )

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