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Information Systems Frontiers

, Volume 16, Issue 4, pp 643–661 | Cite as

Dynamic competition in IT security: A differential games approach

  • Tridib BandyopadhyayEmail author
  • Dengpan Liu
  • Vijay S. Mookerjee
  • Allen W. Wilhite
Article

Abstract

Hackers evaluate potential targets to identify poorly defended firms to attack, creating competition in IT security between firms that possess similar information assets. We utilize a differential game framework to analyze the continuous time IT security investment decisions of firms in such a target group. We derive the steady state equilibrium of the duopolistic differential game, show how implicit competition induces overspending in IT defense, and then demonstrate how such overinvestment can be combated by innovatively managing the otherwise misaligned incentives for coordination. We show that in order to achieve cooperation, the firm with the higher asset value must take the lead and provide appropriate incentives to elicit participation of the other firm. Our analysis indicates that IT security planning should not remain an internal, firm-level decision, but also incorporate the actions of those firms that hackers consider as alternative targets.

Keywords

IT security Dynamic games Competing defense Cyber defense Investment in IT security 

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Copyright information

© Springer Science+Business Media, LLC 2012

Authors and Affiliations

  • Tridib Bandyopadhyay
    • 3
    Email author
  • Dengpan Liu
    • 1
  • Vijay S. Mookerjee
    • 2
  • Allen W. Wilhite
    • 4
  1. 1.Iowa State UniversityAmesUSA
  2. 2.The University of Texas at DallasRichardsonUSA
  3. 3.Kennesaw State UniversityKennesawUSA
  4. 4.University of Alabama at HuntsvilleHuntsvilleUSA

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