Within the sample breach letter that was attached, there are many kinds of
economic and social science theories that could be related to it. The economic theories
that tied to it most were the Information Asymetry and Externality theories. The social
science theories that most tied to this letter were the social contract and risk society
theories.
Information asymmetry can be tied to data breach notification letters in how they
would directly address the kinds of information asymmetries between the companies
and consumers. Before laws were put into place, companies would be able to have
private information on security incidents involving consumers who would be unaware of
the risks to their private data. The letter is relevant in how it reduces information
asymmetry in how it is legally requiring disclosure. The theory also had economic
implications through how in the possibility there would not be notification requirements,
the market would fail as the consumers would not be able to distinguish between secure
and insecure companies. Having mandatory disclosure also creates more reputational
costs as they help for better security practices.
The second economic theory that most ties with the sample breach letter is with
the externality theory. It can be applied to breach letters in how data breaches can
cause many negative externalities. This outcome could have costs imposed on parties
that were not even involved in the original transactions. It is relevant through how the
breach notification represents an attempt in internalizing external costs. The affected
individuals would also bear many costs that they did not agree to. The economic
implications to this are vast with social costs of breaches exceeding any private costs to
the breached company and the legal requirements of this notification creating financial
incentives for companies to invest in preventing any potential incident from occurring.
With the first social science theory presented, I believe that the Social Contract
Theory ties greatly with how the letter is representative of a breakdown and attempted
restoration of the social contract between businesses and consumers. They ultimately
want to inform the consumer that their data will be protected. It is relevant due to how
consumers must agree to share their personal data in exchange for getting protection
and services. Any breaches could violate this social contract as well. The offering of free
services is an attempt to reestablish the trust of the consumer. The social implications
are vast with the letter following the elements of confession and absolution. The legal
compliance also demonstrates a respect for the law and social institutions.

The second social science theory is with the risk society theory. It can be applied
to breach letters in how breach notifications can exemplify risk society in which modern
institutions can create new forms of risk that would require new forms of social
communication and organization. Data breaches can also represent a manufactured
risk that is created by emerging technologies. Notification letters are how institutions
respon in order to manage these new risks and communicate them with consumers.
This theory has social implications in how the letters are making the risks individualized
and makes the consumers responsible for protection. The technical language of the
letter also creates a distance between the institution and the affected consumer.
There are connections between these theories and how they work. Information
asymmetry can create power imbalances that a breach notification would try to address.
Externality costs could include both a loss in social and economic trust. The risk society
theory could explain why an economic solution is insufficient for social issues. Overall,
the breach letters help to balance the economic interests of the company with the social
obligation in order to try to make everyone happy. By establishing this letter format, it
can allow for more economic efficiency and functioning better in society.
In summation, data breach notification letters can serve as a great study into how
economic theories can interact and even intersect with social theories. Both sides
represent different problems and questions that reflect the complicated world we live in.
They are attempts from institutions to manage the complex consequences of the
technological world. By mitigating these risks now, they can build a framework to
mitigate any potential issues in the present and future.