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Credit and Identity Theft

FRB of Atlanta Working Paper No. 2005-19

34 Pages Posted: 13 Oct 2005  

Charles M. Kahn

University of Illinois, Urbana-Champaign; Feseral Reserve Bank of Saint Louis; Bank of Canada

William Roberds

Federal Reserve Bank of Atlanta

Date Written: August 2005

Abstract

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

Kahn, Charles M. and Roberds, William, Credit and Identity Theft (August 2005). FRB of Atlanta Working Paper No. 2005-19. Available at SSRN: https://ssrn.com/abstract=814026 or http://dx.doi.org/10.2139/ssrn.814026

Charles M. Kahn

University of Illinois, Urbana-Champaign ( email )

Department of Finance
340 Wohlers Hall
Champaign, IL 61820
United States

HOME PAGE: http://kahnfrance.com/cmk/

Feseral Reserve Bank of Saint Louis

411 Locust St
Saint Louis, MO 63011
United States

Bank of Canada

234 Wellington Street
Ontario, Ottawa K1A 0G9
Canada

William Roberds (Contact Author)

Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street N.E.
Atlanta, GA 30309-4470
United States
404-498-8970 (Phone)
404-498-8956 (Fax)

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