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Data breaches and identity theft

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Author Info

  • Roberds, William
  • Schreft, Stacey L.

Abstract

An environment is analyzed in which agents join clubs (payment networks) in order to facilitate trade. The networks compile personal identifying data (PID) so as to match transactors to transactions histories. Technological limitations cause the networks' data management practices to impact each other's incidence and costs of identity theft. Too much data collection and too little security arise in equilibrium with noncooperative networks compared to the efficient allocation. A number of potential remedies are analyzed: (1) reallocations of data-breach costs, (2) mandated security levels, and (3) mandated limits on the amount of data collected.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 56 (2009)
Issue (Month): 7 (October)
Pages: 918-929

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Handle: RePEc:eee:moneco:v:56:y:2009:i:7:p:918-929

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Web page: http://www.elsevier.com/locate/inca/505566

Related research

Keywords: Identity theft Identity fraud Data breach Fraud Money Search;

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References

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  1. Charles M. Kahn & James McAndrews & William Roberds, 2005. "Money Is Privacy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(2), pages 377-399, 05.
  2. Kahn, Charles M. & Roberds, William, 2008. "Credit and identity theft," Journal of Monetary Economics, Elsevier, vol. 55(2), pages 251-264, March.
  3. Klaus Kultti, 1996. "A monetary economy with counterfeiting," Journal of Economics, Springer, vol. 63(2), pages 175-186, June.
  4. Antoine Martin & Michael Orlando & David Skeie, 2008. "Payment networks in a search model of money," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 11(1), pages 104-132, January.
  5. Edward J. Green & Warren Weber, 1996. "Will the New $100 Bill Decrease Counterfeiting?," Macroeconomics 9609003, EconWPA, revised 11 Sep 1996.
  6. Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-54, August.
  7. Julia S. Cheney, 2005. "Identity theft: do definitions still matter?," Payment Cards Center Discussion Paper 05-10, Federal Reserve Bank of Philadelphia.
  8. Philip Keitel, 2008. "Legislative responses to data breaches and information security failures," Payment Cards Center Discussion Paper 08-09, Federal Reserve Bank of Philadelphia.
  9. Prescott, Edward C & Boyd, John H, 1987. "Dynamic Coalitions: Engines of Growth," American Economic Review, American Economic Association, vol. 77(2), pages 63-67, May.
  10. Ricardo Cavalcanti & Ed Nosal, 2007. "Counterfeiting as private money in mechanism design," Working Paper 0716, Federal Reserve Bank of Cleveland.
  11. Mark N. Greene, 2009. "Divided we fall: Fighting payments fraud together," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 37-42.
  12. Kocherlakota, Narayana R., 1998. "Money Is Memory," Journal of Economic Theory, Elsevier, vol. 81(2), pages 232-251, August.
  13. Monnet, Cyril, 2005. "Counterfeiting and inflation," Working Paper Series 0512, European Central Bank.
  14. Keith B. Anderson & Erik Durbin & Michael A. Salinger, 2008. "Identity Theft," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 171-192, Spring.
  15. Monnet, Cyril & Roberds, William, 2008. "Optimal pricing of payment services," Journal of Monetary Economics, Elsevier, vol. 55(8), pages 1428-1440, November.
  16. Julia S. Cheney, 2004. "Identity theft: where do we go from here?," Payment Cards Center Discussion Paper 04-03, Federal Reserve Bank of Philadelphia.
  17. Gabriele Camera & Yiting Li, 2008. "Another Example of a Credit System that Co-Exists with Money," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 40(6), pages 1295-1308, 09.
  18. Stacey L. Schreft, 2007. "Risks of identity theft: Can the market protect the payment system?," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 5-40.
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Cited by:
  1. William Roberds & Stacey L. Schreft, 2009. "Data security, privacy, and identity theft: The economics behind the policy debates," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q I, pages 22-30.

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