The article examines bug bounty policies, these bounties pay individuals to find and report vulnerabilities in a company’s cyber infrastructure. This emphasizes their economic basis, as they offer a cost-effective way for companies to bolster their defenses by tapping into external expertise. The literature review traces the evolution of bug bounty programs and highlights their role in cybersecurity using a social science framework to understand their effectiveness. The discussion of findings highlights the importance of bug bounty policies in mitigating potential losses due to cyber-attacks. This emphasizes the need to consider financial incentives of ethical hackers participating in these programs. The article also dives into factors such as incentive structures and industry variations. This gives the reader insight into optimizing bug bounty policies for different contexts.