Data Redundancies and Cyber Attacks
85 Pages Posted: 15 Apr 2024
There are 2 versions of this paper
Data Redundancies and Cyber Attacks
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: Suggested Citation