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White or Black Hat? An Economic Analysis of Computer Hacking

Caitlin Brown ()
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Caitlin Brown: Department of Economics, Georgetown University, https://sites.google.com/site/caitbrownecon/

No gueconwpa~15-15-04, Working Papers from Georgetown University, Department of Economics

Abstract: Cyber attacks have increased sharply in recent years. This paper investigates the decision a profit-motivated hacker makes between working as a malicious hacker, called a black hat, and in cybersecurity as a white hat hacker. A key component of the model is the contest between white and black hats for some part of firm output that is vulnerable to attack. White and black hat earnings are increasing, nonlinear functions of the proportion of black hats. Multiple equilibria exist. Increasing the role of law enforcement in both apprehending black hats and the provision of computer security are shown to decrease the proportion of black hats in equilibrium.

Keywords: Computer hacking; cybercrime; information security; crime; multiple equilibria (search for similar items in EconPapers)
JEL-codes: K42 L86 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ict and nep-law
Date: 2015-06-11
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Persistent link: http://EconPapers.repec.org/RePEc:geo:guwopa:gueconwpa~15-15-04

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Roger Lagunoff Professor of Economics Georgetown University Department of Economics Washington, DC 20057-1036
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