Journal Entry 12

Deja Brown

Economic and social theories relate to the data breach letter. These theories help form the Broader implications of data breaches beyond financial losses, reputation,and the societal impacts of corporate actions.

Economic theories:

  1. Cost benefit analysis: involves weighing the total expected costs against the total expected benefits of one or more options.
  2. Externalities:  can occur when the actions of different people or companies have effects on 3rd parties that aren’t reflected in market prices.

Social Science Theories:

  1. Social contract theory: this implies that individuals consent (explicitly or implicitly) to surrender some freedoms and submit to the authority of the ruler in exchange for protection. Basically, companies have social contact with clients/customers to protect their data. 
  2. Labeling theory: labels applied to individuals influence their behavior and how they are perceived by society. Companies can get labeled as untrustworthy in the case of a data breach. That can make the company look bad.