Investments and Trade-offs in the Economics of Information Security

Christos Ioannidis, David Pym, Julian Williams

Research output: Chapter in Book/Report/Conference proceedingChapter

22 Citations (Scopus)


We develop and simulate a dynamic model of investment in information security. The model is based on the recognition that both IT managers and users appreciate the trade-off between the fundamental characteristics of information security, namely confidentiality and availability. The model's parameters can be clustered in a manner that allows us to categorize and compare the responses to shocks of various types of organizations. We derive the system's stability conditions and find that they admit a wide choice of parameters. We examine the system's responses to the same shock in confidentiality under different parameter constellations that correspond to various types of organizations. Our analysis illustrates that the response to investments in information security will be uniform in neither size nor time evolution.
Original languageEnglish
Title of host publicationFinancial Cryptography and Data Security
Subtitle of host publication13th International Conference, FC 2009, Revised Selected Papers
EditorsRoger Dingledine, Philippe Golle
Place of PublicationHeidelberg, Germany
PublisherSpringer Verlag
Number of pages19
ISBN (Electronic)978-3642035487
ISBN (Print)3642035485, 978-3642035487
Publication statusPublished - 28 Jul 2009

Publication series

NameSecurity and Cryptology (Lecture Notes in Computer Science)
ISSN (Print)0302-9743

Bibliographical note

Revised selected papers, 13th International Conference on Financial Cryptography and Data Security, FC 2009, held in Accra Beach, Barbados, in February 2009.


  • Loss function
  • capital stock
  • Information Security
  • Security breach
  • Quadratic loss function


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