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Data breaches and identity theft

  • Roberds, William
  • Schreft, Stacey L.

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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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
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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  1. 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.
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  7. Monnet, Cyril & Roberds, William, 2008. "Optimal pricing of payment services," Journal of Monetary Economics, Elsevier, vol. 55(8), pages 1428-1440, November.
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  13. Julia S. Cheney, 2005. "Identity theft: do definitions still matter?," Payment Cards Center Discussion Paper 05-10, Federal Reserve Bank of Philadelphia.
  14. Julia S. Cheney, 2004. "Identity theft: where do we go from here?," Payment Cards Center Discussion Paper 04-03, Federal Reserve Bank of Philadelphia.
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  19. 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.
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