If communication involves some transactions cost to both sender and recipient, what policy ensures that correct messages – those with positive social surplus — get sent? Filters block messages that harm recipients but benefit senders by more than transactions costs. Taxes can block positive value messages, and allow harmful messages through. In contrast, we propose an “Attention Bond,” allowing recipients to define a price that senders must risk to deliver the initial message.

The underlying problem is first-contact information asymmetry with negative externalities. Uninformed senders waste recipient attention through message pollution. Requiring attention bonds creates an attention market, effectively applying the Coase Theorem to price this scarce resource. In this market, screening mechanisms shift the burden of message classification from recipients to senders, who know message content. Price signals can also facilitate decentralized two-sided matching. In certain limited cases, this leads to greater welfare than use of even “perfect” filters.

Thede Loder, Marshall Van Alstyne, and Rick Wash. “An Economic Solution to Unsolicited Communications,” Advances in Economic Analysis and Policy, vol. 6, no. 1, Berkeley Electronic Press 2006

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Humans are “smart components” in a system, but cannot be directly programmed to perform; rather, their autonomy must be respected as a design constraint and incentives provided to induce desired behavior. Sometimes these incentives are properly aligned, and the humans don’t represent a vulnerability. But often, a misalignment of incentives causes a weakness in the system that can be exploited by clever attackers. Incentive-centered design tools help us understand these problems, and provide design principles to alleviate them. We describe incentive-centered design and some tools it provides. We provide a number of examples of security problems for which Incentive Centered Design might be helpful. We elaborate with a general screening model that offers strong design principles for a class of security problems.

Rick Wash and Jeffrey K. MacKie-Mason. “Security When People Matter: Structuring Incentives for User Behavior.” Proceedings of the International Conference on Electronic Commerce, August 2007.

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Humans are “smart components” in a system, but cannot be directly programmed to perform; rather, their autonomy must be respected as a design constraint and incentives provided to induce desired behavior. Sometimes these incentives are properly aligned, and the humans don’t represent a vulnerability. But often, a misalignment of incentives causes a weakness in the system that can be exploited by clever attackers. Incentive-centered design tools help us understand these problems, and provide design principles to alleviate them. We describe incentive-centered  design and some tools it provides. We provide a number of examples of security problems for which Incentive Centered Design might be helpful. We elaborate with a general screening model that offers strong design principles for a class of security problems.

Rick Wash and Jeff MacKie-Mason. “Incentive Centered Design and Information Security,” Presented at the First Workshop on Hot Topics in Security (HotSec). July 2006.

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We explore an alternative approach to spam based on economic rather than technological or regulatory screening mechanisms. We employ a model of email value which supports two intuitive notions: 1) mechanisms designed to promote valuable communication can often outperform those designed merely to block wasteful communication, and 2) designers of such mechanisms should shift focus away from the information in the message to the information known to the sender. We then use principles of information asymmetry to cause people who knowingly misuse communication to incur higher costs than those who do not. In certain cases, though not all, we can show this approach leaves recipients better off than even an idealized or “perfect” filter that costs nothing and makes no mistakes. Our mechanism also accounts for individual differences in opportunity costs, and allows for bi-directional wealth transfers while facilitating both sender signaling and recipient screening.

Thede Loder, Marshall Van Alstyne, and Rick Wash. An Economic Solution to the Spam Problem. Proceedings of the ACM Conference on Electronic Commerce, 2004.

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* This material is based upon work supported by the National Science Foundation under Grant No. 0114368.