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Transient Customer Response to Data Breaches of Their Information

Author

Listed:
  • Sumit Agarwal

    (NUS Business School, National University of Singapore, Singapore 119245)

  • Pulak Ghosh

    (Decision Sciences & Public Policy, Indian Institute of Management Bangalore, Bangalore 560076, India)

  • Tianyue Ruan

    (NUS Business School, National University of Singapore, Singapore 119245)

  • Yunqi Zhang

    (School of Finance, Nankai University, Tianjin 300350, China)

Abstract

Cybersecurity breaches pose a substantial concern in the digital era. We investigate how customers respond to multiple unexpected data breaches of their information in India. Difference-in-differences estimates show that digital payments declined by 9% relative to cash payments immediately after an unexpected data breach in a food delivery platform, but the gap disappeared three months later. Customer entry and exit also exhibit weak, short-lived changes. Additional analyses on bank and online grocery data breaches uncover even weaker effects of data breaches. Our findings imply that the perceived benefits of convenience outweigh the costs of payment security risks.

Suggested Citation

  • Sumit Agarwal & Pulak Ghosh & Tianyue Ruan & Yunqi Zhang, 2024. "Transient Customer Response to Data Breaches of Their Information," Management Science, INFORMS, vol. 70(6), pages 4105-4114, June.
    • Handle: RePEc:inm:ormnsc:v:70:y:2024:i:6:p:4105-4114
    DOI: 10.1287/mnsc.2021.01335
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    References listed on IDEAS

    as
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