information inefficiencies

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Visible to the public Scarcity of User Information and the Link Between Computer Security and Reliability

Submitted by galina.schwartz on Wed, 11/10/2010 - 1:40pm. Contributors:

This paper studies manufacturer incentives to invest in the improvement of reliability and security of a software system when (i) reliability and security failures are caused by the same errors in the development of the software components and (ii) naive users find it too costly to distinguish between these two classes of system failures.We trace the effects of these informational imperfections and discuss how the resulting supply and demand externalities affect manufacturer investments.