Coordination in network security games

Malicious softwares or malwares for short have become a major security threat. While originating in criminal behavior, their impact are 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. An unexplored direction of this challenge consists in under- standing how to align the incentives of the agents of a large network towards a better security. This paper addresses this new line of research. We start with an economic model for a single agent, that determines the optimal amount to invest in protection. The model takes into account the vulnerability of the agent to a security breach and the potential loss if a security breach occurs. We derive conditions on the quality of the protection to ensure that the optimal amount spent on security is an increasing function of the agent´s vulnerability and potential loss. We also show that for a large class of risks, only a small fraction of the expected loss should be invested. Building on these results, we study a network of interconnected agents subject to epidemic risks. We derive conditions to ensure that the incentives of all agents are aligned towards a better security. When agents are strategic, we show that security investments are always socially inefficient due to the network externalities. Moreover if our conditions are not satisfied, incentives can be aligned towards a lower security leading to an equilibrium with a very high price of anarchy.