Economic Impacts of Alternative Regulations for Data Breach
Wooje Cho · Information Society & Media · 2015
A considerable amount of customer data has been collected by firms for their business activities. Though customers’ personal information should be secured by the firms, the customer data is often stolen and misused for various crimes. We develop an analytic model for the data breach of firms, and investigate alternative legal frameworks that affect firm’s decision on securing customer data. Our findings show that the laws imposing the liability for customer’s loss caused by data breach on the firm may give greater incentive for firms to invest in security to protect customer data than the laws imposing the liability on customers, and the conditions are identified in this study.