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Choosing What to Protect: Strategic Defensive Allocation against an Unknown Attacker

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  • VICKI BIER
  • SANTIAGO OLIVEROS
  • LARRY SAMUELSON
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    Abstract

    We study a strategic model in which a defender must allocate defensive resources to a collection of locations and an attacker must choose a location to attack. In equilibrium, the defender sometimes optimally leaves a location undefended and sometimes prefers a higher vulnerability at a particular location even if a lower risk could be achieved at zero cost. The defender prefers to allocate resources in a centralized (rather than decentralized) manner, the optimal allocation of resources can be non-monotonic in the value of the attacker's outside option, and the defender prefers her defensive allocation to be public rather than secret. Copyright 2007 Blackwell Publishing, Inc..

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    Bibliographic Info

    Article provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.

    Volume (Year): 9 (2007)
    Issue (Month): 4 (08)
    Pages: 563-587

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    Handle: RePEc:bla:jpbect:v:9:y:2007:i:4:p:563-587

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    1. Martin Shubik & Robert J. Weber, 1978. "Systems Defense Games: Colonel Blotto, Command and Control," Cowles Foundation Discussion Papers 489, Cowles Foundation for Research in Economics, Yale University.
    2. Arce M., Daniel G. & Sandler, Todd, 2001. "Transnational public goods: strategies and institutions," European Journal of Political Economy, Elsevier, vol. 17(3), pages 493-516, September.
    3. Lapan, Harvey E. & Sandler, Todd, 1993. "Terrorism and Signalling," Staff General Research Papers 10808, Iowa State University, Department of Economics.
    4. Sandler, Todd & Enders, Walter, 2004. "An economic perspective on transnational terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 301-316, June.
    5. Bruno S. Frey & Simon Luechinger, . "How to Fight Terrorism: Alternatives to Deterrence," IEW - Working Papers 137, Institute for Empirical Research in Economics - University of Zurich.
    6. Geoffrey Heal & Howard Kunreuther, 2004. "Interdependent Security: A General Model," NBER Working Papers 10706, National Bureau of Economic Research, Inc.
    7. Lakdawalla, Darius & Zanjani, George, 2005. "Insurance, self-protection, and the economics of terrorism," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1891-1905, September.
    8. Kunreuther, Howard & Heal, Geoffrey, 2003. " Interdependent Security," Journal of Risk and Uncertainty, Springer, vol. 26(2-3), pages 231-49, March-May.
    9. Sandler, Todd & Lapan, Harvey E., 1988. "The Calculus of Dissent: An Analysis of Terrorists' Choice of Targets," Staff General Research Papers 10818, Iowa State University, Department of Economics.
    10. Bruno S. Frey & Simon Luechinger, . "Terrorism: Deterrence May Backfire," IEW - Working Papers 136, Institute for Empirical Research in Economics - University of Zurich.
    11. Todd Sandler, 2003. "Collective Action and Transnational Terrorism," The World Economy, Wiley Blackwell, vol. 26(6), pages 779-802, 06.
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    Cited by:
    1. Subhayu Bandyopadhyay & Todd Sandler, 2009. "The interplay between preemptive and defensive counterterrorism measures: a two-stage game," Working Papers 2008-034, Federal Reserve Bank of St. Louis.
    2. Dan Kovenock & Brian Roberson & Roman M. Sheremeta, 2010. "The Attack and Defense of Weakest-Link Networks," Working Papers 10-14, Chapman University, Economic Science Institute.
    3. Bernhardt, Dan & Polborn, Mattias K., 2010. "Non-convexities and the gains from concealing defenses from committed terrorists," Economics Letters, Elsevier, vol. 107(1), pages 52-54, April.
    4. Dan Kovenock & Brian Roberson, 2010. "The Optimal Defense of Networks of Targets," Purdue University Economics Working Papers 1251, Purdue University, Department of Economics.
    5. Eiselt, H.A. & Bhadury, Joy & Burkey, Mark L., 2011. "An optimization-based framework for modeling counterterrorism strategies," MPRA Paper 36117, University Library of Munich, Germany.
    6. Christopher Cotton & Cheng Li, 2012. "Profiling, Screening and Criminal Recruitment," Working Papers 2013-02, University of Miami, Department of Economics.
    7. Daniel G. Arce & Dan Kovenock J. & Brian Roberson, 2009. "Suicide Terrorism and the Weakest Link," CESifo Working Paper Series 2753, CESifo Group Munich.

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