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An economic analysis of the optimal information security investment in the case of a risk-averse firm

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  • Derrick Huang, C.
  • Hu, Qing
  • Behara, Ravi S.

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  • Derrick Huang, C. & Hu, Qing & Behara, Ravi S., 2008. "An economic analysis of the optimal information security investment in the case of a risk-averse firm," International Journal of Production Economics, Elsevier, vol. 114(2), pages 793-804, August.
    • Handle: RePEc:eee:proeco:v:114:y:2008:i:2:p:793-804
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    References listed on IDEAS

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    3. Jay Kesan & Rupterto Majuca & William Yurcik, "undated". "The Economic Case for Cyberinsurance," University of Illinois Legal Working Paper Series uiuclwps-1001, University of Illinois College of Law.
    4. Fishburn, Peter C, 1989. "Retrospective on the Utility Theory of von Neumann and Morgenstern," Journal of Risk and Uncertainty, Springer, vol. 2(2), pages 127-157, June.
    5. Kjell Hausken, 2006. "Returns to information security investment: The effect of alternative information security breach functions on optimal investment and sensitivity to vulnerability," Information Systems Frontiers, Springer, vol. 8(5), pages 338-349, December.
    6. Stapleton, R C & Subrahmanyam, M G, 1990. "Risk Aversion and the Intertemporal Behavior of Asset Prices," The Review of Financial Studies, Society for Financial Studies, vol. 3(4), pages 677-693.
    7. Browne, S., 1995. "Optimal Investment Policies for a Firm with a Random Risk Process: Exponential Utility and Minimizing the Probability of Ruin," Papers 95-08, Columbia - Graduate School of Business.
    8. Huseyin Cavusoglu & Birendra Mishra & Srinivasan Raghunathan, 2005. "The Value of Intrusion Detection Systems in Information Technology Security Architecture," Information Systems Research, INFORMS, vol. 16(1), pages 28-46, March.
    9. Detmar W. Straub, 1990. "Effective IS Security: An Empirical Study," Information Systems Research, INFORMS, vol. 1(3), pages 255-276, September.
    10. Milton Friedman & L. J. Savage, 1952. "The Expected-Utility Hypothesis and the Measurability of Utility," Journal of Political Economy, University of Chicago Press, vol. 60(6), pages 463-463.
    11. Henderson, Vicky & Hobson, David G., 2002. "Real options with constant relative risk aversion," Journal of Economic Dynamics and Control, Elsevier, vol. 27(2), pages 329-355, December.
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    Cited by:

    1. 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.
    2. Kaur, Harpreet & Gupta, Mahima & Singh, Surya Prakash, 2024. "Integrated model to optimize supplier selection and investments for cyber resilience in digital supply chains," International Journal of Production Economics, Elsevier, vol. 275(C).
    3. 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.
    4. Mazaher Kianpour & Stewart J. Kowalski & Harald Øverby, 2021. "Systematically Understanding Cybersecurity Economics: A Survey," Sustainability, MDPI, vol. 13(24), pages 1-28, December.
    5. Huang, C. Derrick & Behara, Ravi S., 2013. "Economics of information security investment in the case of concurrent heterogeneous attacks with budget constraints," International Journal of Production Economics, Elsevier, vol. 141(1), pages 255-268.
    6. 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.
    7. Yong Wu & Junlin Duan & Tao Dai & Dong Cheng, 2020. "Managing Security Outsourcing in the Presence of Strategic Hackers," Decision Analysis, INFORMS, vol. 17(3), pages 235-259, September.
    8. Xing Gao & Weijun Zhong & Shue Mei, 2015. "Security investment and information sharing under an alternative security breach probability function," Information Systems Frontiers, Springer, vol. 17(2), pages 423-438, April.
    9. Alessandro Fedele & Cristian Roner, 2022. "Dangerous games: A literature review on cybersecurity investments," Journal of Economic Surveys, Wiley Blackwell, vol. 36(1), pages 157-187, February.
    10. Mayadunne, Sanjaya & Park, Sungjune, 2016. "An economic model to evaluate information security investment of risk-taking small and medium enterprises," International Journal of Production Economics, Elsevier, vol. 182(C), pages 519-530.
    11. 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.
    12. Yosra Miaoui & Noureddine Boudriga, 2019. "Enterprise security investment through time when facing different types of vulnerabilities," Information Systems Frontiers, Springer, vol. 21(2), pages 261-300, April.
    13. David Iliaev & Sigal Oren & Ella Segev, 2023. "A Tullock-contest-based approach for cyber security investments," Annals of Operations Research, Springer, vol. 320(1), pages 61-84, January.
    14. Jhih-Hua Jhang-Li & Cheng-Wei Chang, 2017. "Analyzing the operation of cloud supply chain: adoption barriers and business model," Electronic Commerce Research, Springer, vol. 17(4), pages 627-660, December.
    15. Xiaotong Li & Qianyao Xue, 2021. "An economic analysis of information security investment decision making for substitutable enterprises," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(5), pages 1306-1316, July.
    16. 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.
    17. 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.
    18. Yosra Miaoui & Noureddine Boudriga, 0. "Enterprise security investment through time when facing different types of vulnerabilities," Information Systems Frontiers, Springer, vol. 0, pages 1-40.
    19. Liao, Chun-Hsiung & Chen, Chun-Wei, 2014. "Network externality and incentive to invest in network security," Economic Modelling, Elsevier, vol. 36(C), pages 398-404.
    20. Lu Xu & Yanhui Li & Jing Fu, 2019. "Cybersecurity Investment Allocation for a Multi-Branch Firm: Modeling and Optimization," Mathematics, MDPI, vol. 7(7), pages 1-20, July.
    21. 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.
    22. Martin (Dae Youp) Kang & Anat Hovav, 2020. "Benchmarking Methodology for Information Security Policy (BMISP): Artifact Development and Evaluation," Information Systems Frontiers, Springer, vol. 22(1), pages 221-242, February.

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