Nature plays with dice - terrorists do not: Allocating resources to counter strategic versus probabilistic risks
AbstractProbabilistic uncertainty is caused by "chance", whereas strategic uncertainty is caused by an adverse interested party. Using linear impact functions, the problems of allocating a limited resource to defend sites that face either probabilistic risk or strategic risk are formulated as optimization problems that are solved explicitly. The resulting optimal policies differ - under probabilistic risk, the optimal policy is to focus the investment of resources on priority sites where they yield the highest impact, while under strategic risk, the best policy is to spread the resources so as to decrease the potential damage level of the most vulnerable site(s). Neither solution coincides with the commonly practiced proportionality allocation scheme.
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Bibliographic InfoArticle provided by Elsevier in its journal European Journal of Operational Research.
Volume (Year): 192 (2009)
Issue (Month): 1 (January)
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Web page: http://www.elsevier.com/locate/eor
Risk analysis Game theory Resource allocation;
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