A STRATEGIC ANALYSIS OF INFORMATION SHARING AMONG CYBER HACKERS

ABSTRACT We build a game theory model where the market design is such that one firm invests in security to defend against cyber attacks by two hackers. The firm has an asset, which is allocated between the three market participants dependent on their contest success. Each hacker chooses an optimal attack, and they share information with each other about the firm's vulnerabilities. Each hacker prefers to receive information, but delivering information gives competitive advantage to the other hacker. We find that each hacker's attack and information sharing are strategic complements while one ha...