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Data breaches and identity theft

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  • William Roberds
  • Stacey L. Schreft

Abstract

This paper presents a monetary-theoretic model to study the implications of networks' collection of personal identifying data and data security on each other's incidence and costs of identity theft. To facilitate trade, agents join clubs (networks) that compile and secure data. Too much data collection and too little security arise in equilibrium with noncooperative networks compared with the efficient allocation. A number of potential remedies are analyzed: mandated limits on the amount of data collected, mandated security levels, reallocations of data-breach costs, and data sharing through a merger of the networks.

Suggested Citation

  • William Roberds & Stacey L. Schreft, 2008. "Data breaches and identity theft," FRB Atlanta Working Paper 2008-22, Federal Reserve Bank of Atlanta.
  • Handle: RePEc:fip:fedawp:2008-22
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    References listed on IDEAS

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    7. 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. Creti, Anna & Verdier, Marianne, 2014. "Fraud, investments and liability regimes in payment platforms," International Journal of Industrial Organization, Elsevier, vol. 35(C), pages 84-93.
    2. Kyoung-Soo Yoon & Jooyong Jun, 2016. "Liability, Information, and Anti-fraud Investment in a Layered Retail Payment Structure," Working Papers 2016-12, Economic Research Institute, Bank of Korea.
    3. Lotz, S├ębastien & Zhang, Cathy, 2016. "Money and credit as means of payment: A new monetarist approach," Journal of Economic Theory, Elsevier, vol. 164(C), pages 68-100.
    4. 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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