How do consumers react after learning that an online bank account has been hacked? Do they take their business elsewhere? Do they limit their online activities to reduce their exposure to such invasions?
Those were some of the questions that intrigued Rahul Telang, a professor of information systems and management at Carnegie Mellon University (CMU) in Pittsburgh, Pennsylvania, who studies the economics of information security. With data breaches an increasingly common problem, he suspected the behavior of hacked consumers could be having a significant impact on global commerce. But Telang didn’t have enough preliminary data to win a grant to study the issue from the National Science Foundation (NSF), which last year funded only 22% of the nearly 50,000 proposals it received.
Fortunately for Telang, NSF offers a funding mechanism that supports the type of exploratory research he wanted to conduct. And this spring Telang received $200,000 to analyze how customers of one major financial institution actually responded to real data breaches. (The firm agreed to share a vast amount of anonymized data with the researcher.)