Credit and Identity Theft
FRB of Atlanta Working Paper No. 2005-19
34 Pages Posted: 13 Oct 2005
Date Written: August 2005
The quintessential crime of the information age is identity theft, the malicious use of personal identifying data. In this paper we model identity and its use in credit transactions. Various types of identity theft occur in equilibrium, including new account fraud, existing account fraud, and friendly fraud. The equilibrium incidence of identity theft represents a tradeoff between a desire to avoid costly or invasive monitoring of individuals on the one hand and the need to control transactions fraud on the other. Our results suggest that technological advances will not eliminate this tradeoff.
Keywords: identity theft, fraud, money, search
JEL Classification: D83, E42, G28
Suggested Citation: Suggested Citation