Economics of Malware: Epidemic Risks Model, Network Externalities and Incentives

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Executive Summary

Malicious softwares or malwares for short have become a major security threat. While originating in criminal behavior, their impact is also influenced by the decisions of legitimate end users. Getting agents in the Internet, and in networks in general, to invest in and deploy security features and protocols is a challenge, in particular because of economic reasons arising from the presence of network externalities. The goal in this paper is to model and quantify the impact of such externalities on the investment in security features in a network. They study a network of interconnected agents, which are subject to epidemic risks such as those caused by propagating viruses and worms.

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