Social Preferences in Decision Making Under Cybersecurity Risks and Uncertainties

Abstract

The most costly cybersecurity incidents for organizations result from the failures of their third parties. This means that organizations should not only invest in their own protection and cybersecurity measures, but also pay attention to that of their business and operational partners. While economic impact and real extent of third parties cybersecurity risks is hard to quantify, decision makers inevitably compare their decisions with other entities in their network. This paper presents a theoretically derived model to analyze the impact of social preferences and other factors on the willingness to cooperate in third party ecosystems. We hypothesize that willingness to cooperate among the organizations in the context of cybersecurity increases following the experience of cybersecurity attacks and increased perceived cybersecurity risks. The effects are mediated by perceived cybersecurity value and moderated by social preferences. These hypotheses are tested using a variance-based structural equation modeling analysis based on feedback from a sample of Norwegian organizations. Our empirical results confirm the strong positive impact of social preferences and cybersecurity attack experience on the willingness to cooperate, and support the reciprocal behavior of cybersecurity decision makers. We further show that more perception of cybersecurity risk and value deter the decision makers to cooperate with other organizations.