Abstract Banning ransomware payments has recently gained traction as a policy proposal aimed at cutting off cybercriminals’ funding sources and compelling companies to bolster their cybersecurity. While the intended goal is to curb cyber extortion, such prohibitions may yield unforeseen repercussions for both organizations and society. This paper argues for integrating the processes of cybersecurity investment, incident reporting, and ransom payments into a holistic analysis. Drawing on economic insights, we explore how incentives shape the decisions of both attackers and victims, and how an outright prohibition on ransom payments could alter victims’ incentives not only for paying but also for implementing security measures and reporting incidents. Our findings suggest that a strict ban may inadvertently reduce the level of cybersecurity investment or prompt organizations to hide attacks. We propose an alternative, more balanced strategy that combines clear cybersecurity standards, broader data breach notification laws, and a conditional safe harbor for certain ransom payments. These measures can maintain essential operations, discourage criminal activity, and realign ec
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