How to Make My Bug Bounty Cost-Effective? A Game-Theoretical Model

A bug bounty program (BBP) is an innovative crowdsourcing security solution increasingly adopted by organizations. We use a game-theoretical model to analyze how key characteristics impact BBPs and offer practical insights into managing a BBP as part of an organization’s vulnerability management for better cost-effectiveness. Our findings indicate that organizations with high patching complexity should announce lower bounties, especially if they face limited security resources. BBPs should complement, not substitute, an organization’s security characteristics. Evaluating patching complexity and security posture is crucial when designing a BBP. Furthermore, security researchers drive BBP performance. Higher productivity in researchers doesn’t always require higher bounties even with high postdiscovery costs. Novice productivity can increase total costs if unit postdiscovery costs are high, whereas expert productivity consistently reduces costs. Organizations should disclose high-level product and information technology (IT) features to increase expert productivity. The number of security researchers in a BBP is important, but increasing their numbers doesn’t always necessitate higher bounties. A larger crowd may not always be cost-effective. Lastly, enhanced legal protection for security researchers might not increase organizational risks, especially in organizations with robust security or less sophisticated IT infrastructure. Industrial associations and policymakers should consider these factors in standards and legal frameworks. To mitigate the threats from malicious exploitation of vulnerabilities, an increasing number of organizations across different industries have started incorporating bug bounty programs (BBPs) in their vulnerability management cycles. Whereas a BBP attracts external security researchers to facilitate the discovery of vulnerabilities in organizations’ information technology systems, it also increases the risks after the vulnerabilities are discovered. To deal with the trade-offs, organizations need to understand how to design an optimal bounty and evaluate the total cost of a BBP depending on several key factors. The industry is motivated to understand how the bounty and total costs are impacted by (i) the characteristics of the organization (e.g., security posture and patching complexity), (ii) security researchers (e.g., the heterogeneity among security researchers and their number), and (iii) other factors such as the legal fram