On the Viability of Using Liability to Incentivise Internet Security

Internet use is characterised by externalities, which means that it can be sufficiently profitable for criminal enterprises to flourish. One possible mechanism which could be considered to improve incentives is liability. We conduct a review of the literature relating to liability theory, liability online, and security economics in general and consider the impact that liability on any particular group would have both to the group themselves and to the incentives of criminal groups. We conclude that although there are instances where liability could have positive economic effects or provide protection to consumers, as a purely economic mechanism its costs outweigh the benefits.