Sharing is caring: Designing incentive rebate strategies for information‐sharing alliances

Abstract

Information security plays a crucial role in organizational governance and management, and information‐sharing alliances (ISAs) have emerged as effective platforms for the secure and controlled sharing of information security knowledge. Despite their potential, many ISAs face financial and operational challenges, including inadequate pricing policies and insufficient incentives for information sharing. This study addresses these challenges by proposing a modeling framework for the fee rebate strategies that ISAs can deploy to motivate effective information sharing. Taking into account the economic implications of both information sharing and information security technology investment, we propose two ISA‐based pricing rebate strategies for information sharing: the split‐return rebate strategy and the swap‐return rebate strategy. Analytical and numerical analyses are conducted to demonstrate the dynamics in different ISA settings under these pricing rebate strategies. The results suggest that in addition to firm size, the price for participating in sharing should be adjusted based on each participating firm's technology investment level, its information‐sharing level, and the marginal cost of information sharing. Also, by focusing on various information‐sharing environments, the study identifies specific conditions under which unfair sharing practices are likely to occur.