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Faculty of Economics

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Baddeley, M.

A Behavioural Analysis of Online Privacy and Security

CWPE1147

Abstract: Psychological and sociological factors constrain economic decision-making in many contexts including the online world. Behavioural economics and economic psychology emphasise that people will make mistakes in processing information and in planning for the future; these mistakes will also distort learning processes. Emotions and visceral factors will play a key role - not only a ecting people's actions but also distorting the interactions between information, learning and choices. This will have wide-ranging implications for online behavior and information security management, making people more vulnerable to security/privacy abuses including hacking, spam attacks, phishing, identity theft and online financial exploitation. These vulnerabilities raise crucial policy questions - recently made more pressing in the light of recent phone-hacking scandals in the UK. This paper outlines some of the behavioural factors affecting people's online behaviour and analyses real-world reactions to online fraud using evidence from the British Crime Survey 2009-10.

Keywords: Behavioural economics, information security, online fraud, cognitive bias

JEL Codes: D03 D18 D83 K42

PDF: http://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1147.pdf

Open Access Link: https://doi.org/10.17863/CAM.1160