The burden of proof and the optimal security investment of firms in ubiquitous computing

Recently security vulnerabilities and fraudulent transactions have simultaneously increase with the rise in use of smart mobile handsets for electronic transactions. Also, the governing liability rule on disputes arising from security breaches is becoming a practical issue as users get accustomed to doing transactions using various smart and intelligent computing devices in ubiquitous computing environments. Although there have been debates in law and computer science literature, there has been little research on legal issues in comparison with the amount of research on technical issues for electronic transactions. This paper analyzes how a burden of proof can play a role in preventing fraudulent transactions and investigates how it is related to firms’ investments in security.