Growing complexity of modern information processing systems in many service-oriented industries has resulted in increasing exposure of private information. This has lead to heightened security concerns related to identity theft: an employee has access to too much personally identifiable...

In the United States, identity theft resulted in corporate and consumer losses of $56 billion dollars in 2005, with up to 35 percent of known identity thefts caused by corporate data breaches. Many states have responded by adopting “data breach disclosure laws” that require firms to notify...

Information security is growing to be an IT priority for many firms, but several critical dimensions of enterprise security like type of loss or strategic effects of countermeasures have received little attention in the economics-based literature. We develop a model of a contagious threat that...