An economic analysis of third-party software reliability improvement using the Bug Bounty Program

Publication Type

Conference Proceeding Article

Publication Date

12-2023

Abstract

Bug Bounty Programs (BBPs) reward external hackers for reporting software vulnerabilities. As the number of security issues caused by third-party applications has been significantly increased recently, many digital platforms are considering launching BBPs to help improve the reliability of third-party software. In this paper, we present an analytical model to examine the strategic decisions of launching and participating in a BBP for the platform and the third-party vendor, respectively. We find that the platform’s (the vendor’s) BBP launching (participation) decisions depend on two key factors: the expected loss due to security breaches and the vendor’s reliability investment efficiency. We show that the incentive of using BBP, for the platform and vendor, sometimes is inconsistent. Meanwhile, we find that using the BBP is not always socially optimal. Under certain conditions, it reduces the overall software reliability, instead of improving it, makes the platform marketplace less secure, and thus hurts end users.

Discipline

Databases and Information Systems | Information Security

Research Areas

Data Science and Engineering

Publication

ICIS 2023: Hyderabad, December 10-13: Proceedings

Publisher

AIS

City or Country

Hyderabad INDIA

Additional URL

https://aisel.aisnet.org/icis2023/cyber_security/cyber_security/8/

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