Economic Theories
1. Cost-benefit analysis – By reporting to the customers about a breach the company is weighing the cost of responding to the breach (such as notifying affected individuals, investing in cybersecurity measures, and potential legal expenses), against the benefits of maintaining customer trust, avoiding fines/penalties, and protecting their reputation.

2. Supply and Demand – Furthering the train of thought by having a breach it is likely to have affected the companies reputation. As even informing your customers about a breach still gives a negative perception of it, this ultimately will lead to less demand and can impact prices.

Social Science Theory
1. Social Exchange Theory – The data breach notification letter may address the social exchange between the company and its customer. As it attempts to repair the trust in the company to keep data integrity.

2. Social Learning Theory – The company might have also suffered previous breaches which it handled in a less transparent way, leading to legal or social consequences. Therefor this is an implemented measure from learning from past mistakes.