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A Multiproduct Network Economic Model of Cybercrime in Financial Services

Author

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  • Anna Nagurney

    (Department of Operations and Information Management, Isenberg School of Management, University of Massachusetts Amherst, Amherst, Massachusetts 01003)

Abstract

In this paper, we propose a network economic model of cybercrime with a focus on financial services, since such organizations are one of the principal targets of such illicit activity. This multiproduct model is constructed as a layered bipartite network with supply price, transaction cost, and demand price functions linking the networks. A novelty of the new model is the incorporation of average time associated with illicit product delivery at the demand markets with the demand price functions being decreasing functions of such times, as noted in reality. The governing equilibrium conditions are formulated as a variational inequality problem with qualitative properties of the solution presented. An algorithm, with nice features for computations, is then applied to two sets of numerical examples in order to illustrate the model and computational procedure as well as the types of interventions that can be investigated from a policy perspective to make it more difficult for cybercriminals to obtain sensitive data.

Suggested Citation

  • Anna Nagurney, 2015. "A Multiproduct Network Economic Model of Cybercrime in Financial Services," Service Science, INFORMS, vol. 7(1), pages 70-81, March.
    • Handle: RePEc:inm:orserv:v:7:y:2015:i:1:p:70-81
    DOI: 10.1287/serv.2015.0095
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