Analyzing Self-Defense Investments in Internet Security Under Cyber-Insurance Coverage

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Internet users such as individuals and organizations are subject to different types of epidemic risks such as worms, viruses, and botnets. To reduce the probability of risk, an Internet user generally invests in self-defense mechanisms like antivirus and anti-spam software. However, such software does not completely eliminate risk. Recent works have considered the problem of residual risk elimination by proposing the idea of cyber-insurance. In this regard, an important decision for Internet users is their amount of investment in self-defense mechanisms when insurance solutions are offered.