Information security investment and purchase decision for personalized products

Abstract

Considering information security and personalization paradoxes, this paper investigates the optimal information security investments of a firm and purchasing decisions of consumers with different privacy concerns in online personalization. It is found that consumers and firm tend to fall into a prisoner's dilemma in Nash equilibrium. To improve security investment efficiency and boost personalization consumption, firm‐led Stackelberg game and firm‐led Stackelberg game with punishment mechanism are proposed and analyzed. The results indicate that the security information measures firm take in advance can effectively increase the waverers' willingness to purchase personalized products. Government punishment helps to facilitate a win‐win situation but does not work when proportion of wavers in the market is very small. Furthermore, the responses of equilibrium strategies and payoffs to related characteristics are discussed numerically. Finally, some managerial insights are recommended to firms who provide personalized products for making proper security investment and to government departments for formulating security punishment policies.

A Structural Framework for Assessing the Digital Resilience of Enterprises in the Context of the Technological Revolution 4.0

“…Information is becoming increasingly important for individuals and organizations, and ensuring their security is a major concern of business managers who need to make optimal investments in ensuring information security and customer confidentiality [38]. Information sharing has become a significant part of companies' security efforts, and the optimal level of sharing can be conditioned by the budget allocated to protection and security [39,40].…”