System Reliability and Free Riding: Difference between revisions
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Revision as of 16:48, 3 June 2010
System Reliability and Free Riding
Full Citation
Hal Varian, System Reliability and Free Riding, in Economics of Information Security (L. Jean Camp & Stephen Lewis eds., 2004). Web AltWeb
Categorization
Issues: Economics of Cybersecurity
Key Words
Synopsis
System reliability often depends on the effort of many individuals, making reliability a public good. It is well-known that purely voluntary provision of public goods may result in a free rider problem: individuals may tend to shirk, resulting in an inefficient level of the public good. How much effort each individual exerts will depend on his own benefits and costs, the efforts exerted by the other individuals, and the technology that relates individual effort to outcomes. In the context of system reliability, we can distinguish three prototype cases.