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A game-theoretic analysis of information sharing and security investment for complementary firms

Author

Listed:
  • Xing Gao

    (Southeast University, Nanjing, Jiangsu, China)

  • Weijun Zhong

    (Southeast University, Nanjing, Jiangsu, China)

  • Shue Mei

    (Southeast University, Nanjing, Jiangsu, China)

Abstract

This paper investigates information sharing and security investments by two firms provided that their information assets are complementary in the sense that their combined information assets are of significant value, whereas the information asset of a single firm is no value to an attacker. In particular, assuming that each firm chooses its security investment and information sharing individually, we obtain some insights about the optimal choices for the firms and the attacker, which form sharp comparisons with those derived from common (substitutive) firms. We further analyse the effect of a social planner on social total costs by assuming that it can control security investments, information sharing and both of them respectively. We demonstrate that an increase in intervention by the social planner may not necessarily be preferable.

Suggested Citation

  • Xing Gao & Weijun Zhong & Shue Mei, 2014. "A game-theoretic analysis of information sharing and security investment for complementary firms," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 65(11), pages 1682-1691, November.
    • Handle: RePEc:pal:jorsoc:v:65:y:2014:i:11:p:1682-1691
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Kjell Hausken, 2017. "Information Sharing Among Cyber Hackers in Successive Attacks," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 19(02), pages 1-33, June.
    2. Schilling, Andreas & Werners, Brigitte, 2016. "Optimal selection of IT security safeguards from an existing knowledge base," European Journal of Operational Research, Elsevier, vol. 248(1), pages 318-327.
    3. Guang Zhu & Hu Liu & Mining Feng, 2018. "Sustainability of Information Security Investment in Online Social Networks: An Evolutionary Game-Theoretic Approach," Mathematics, MDPI, vol. 6(10), pages 1-19, September.
    4. Xing Gao & Weijun Zhong, 2015. "Information security investment for competitive firms with hacker behavior and security requirements," Annals of Operations Research, Springer, vol. 235(1), pages 277-300, December.
    5. Guang Zhu & Hu Liu & Mining Feng, 2018. "An Evolutionary Game-Theoretic Approach for Assessing Privacy Protection in mHealth Systems," IJERPH, MDPI, vol. 15(10), pages 1-27, October.
    6. Yong Wu & Gengzhong Feng & Richard Y. K. Fung, 2018. "Comparison of information security decisions under different security and business environments," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 69(5), pages 747-761, May.
    7. Yan Cheng & Shue Mei & Weijun Zhong & Xing Gao, 2023. "Managing consumer privacy risk: The effects of privacy breach insurance," Electronic Commerce Research, Springer, vol. 23(2), pages 807-841, June.
    8. Xiaofei Qian & Jun Pei & Xinbao Liu & Mi Zhou & Panos M. Pardalos, 2019. "Information security decisions for two firms in a market with different types of customers," Journal of Combinatorial Optimization, Springer, vol. 38(4), pages 1263-1285, November.
    9. Yong Wu & Mengyao Xu & Dong Cheng & Tao Dai, 2022. "Information Security Strategies for Information-Sharing Firms Considering a Strategic Hacker," Decision Analysis, INFORMS, vol. 19(2), pages 99-122, June.
    10. Xiaotong Li, 2022. "An evolutionary game‐theoretic analysis of enterprise information security investment based on information sharing platform," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(3), pages 595-606, April.
    11. Xing Gao & Weijun Zhong, 2016. "Economic incentives in security information sharing: the effects of market structures," Information Technology and Management, Springer, vol. 17(4), pages 361-377, December.
    12. Meilin He & Laura Devine & Jun Zhuang, 2018. "Perspectives on Cybersecurity Information Sharing among Multiple Stakeholders Using a Decision‐Theoretic Approach," Risk Analysis, John Wiley & Sons, vol. 38(2), pages 215-225, February.
    13. Xinbao Liu & Xiaofei Qian & Jun Pei & Panos M. Pardalos, 2018. "Security investment and information sharing in the market of complementary firms: impact of complementarity degree and industry size," Journal of Global Optimization, Springer, vol. 70(2), pages 413-436, February.
    14. Xiaofei Qian & Xinbao Liu & Jun Pei & Panos M. Pardalos & Lin Liu, 2017. "A game-theoretic analysis of information security investment for multiple firms in a network," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(10), pages 1290-1305, October.
    15. Xing Gao & Weijun Zhong, 2016. "A differential game approach to security investment and information sharing in a competitive environment," IISE Transactions, Taylor & Francis Journals, vol. 48(6), pages 511-526, June.
    16. Kjell Hausken, 2017. "Security Investment, Hacking, and Information Sharing between Firms and between Hackers," Games, MDPI, vol. 8(2), pages 1-23, May.

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