Information Security as a Credence Good

  • Ping Fan Ke
  • Kai-Lung Hui
  • Wei T. Yue
Part of the Lecture Notes in Computer Science book series (LNCS, volume 7862)


With increasing use of information systems, many organizations are outsourcing information security protection to a managed security service provider (MSSP). However, diagnosing the risk of an information system requires special expertise, which could be costly and difficult to acquire. The MSSP may exploit their professional advantage and provide fraudulent diagnosis of clients’ vulnerabilities. Such an incentive to mis-represent clients’ risks is often called the credence goods problem in the economics literature[3]. Although different mechanisms have been introduced to tackle the credence goods problem, in the information security outsourcing context, such mechanisms may not work well with the presence of system interdependency risks[6], which are introduced by inter-connecting multiple clients’ systems by the MSSP. In particular, we find that allowing clients to seek alternative diagnosis of their vulnerabilities may not remove the MSSP’s fraudulent behaviors. We shall explore alternative ways to solve the credence goods problem in the information security outsourcing context.


Information security outsourcing credence good interdependency risks 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. 1.
    Akerlof, G.A.: The market for “lemons”: Quality uncertainty and the market mechanism. The Quarterly Journal of Economics 84(3), 488–500 (1970)CrossRefGoogle Scholar
  2. 2.
    Anderson, R., Moore, T.: The economics of information security. Science 314(5799), 610–613 (2006)CrossRefGoogle Scholar
  3. 3.
    Dulleck, U., Kerschbamer, R.: On doctors, mechanics, and computer specialists: The economics of credence goods. Journal of Economic Literature 44(1), 5–42 (2006)CrossRefGoogle Scholar
  4. 4.
    Emons, W.: Credence goods and fraudulent experts. The Rand Journal of Economics 28(1), 107–119 (1997)CrossRefGoogle Scholar
  5. 5.
    Fong, Y.: When do experts cheat and whom do they target? RAND Journal of Economics 36(1), 113–130 (2005)MathSciNetGoogle Scholar
  6. 6.
    Kunreuther, H., Heal, G.: Interdependent security. Journal of Risk and Uncertainty 26(2), 231–249 (2003)CrossRefzbMATHGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  • Ping Fan Ke
    • 1
  • Kai-Lung Hui
    • 1
  • Wei T. Yue
    • 2
  1. 1.Hong Kong University of Science and TechnologyHong Kong
  2. 2.City University of Hong KongHong Kong

Personalised recommendations