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Cyber Technology and the Arms Race

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  • Vesa Kanniainen

Abstract

Cyber technology represents digital military capability with the purpose of causing damage to the military strength of a potential enemy. War using conventional weapons may be preceded by a strike using cyber technology. This paper introduces such technology into the theory of conflicts. The cost of war relative to the payoff from victory turns out to be crucial for the results on armament decisions. In the war game, two types of Nash equilibria may arise. One is subject to warfare while the other is not (‘equilibrium of terror’), depending on the perceived cost of war. In a symmetric war game, cyber capabilities are neutral with respect to the investments in conventional weapons, but they make wars more likely. Asymmetric access to cyber technology limits the international arms race with conventional weapons. A low success probability in the cyber programme encourages exercising the cyberattack option as the enemy may not have access to cyber capability. Uncertainty of the success of a cyber programme makes countries cautious when allocating resources not only to these programmes but also in conventional armament.

Suggested Citation

  • Vesa Kanniainen, 2019. "Cyber Technology and the Arms Race," German Economic Review, Verein für Socialpolitik, vol. 20(4), pages 523-544, November.
    • Handle: RePEc:bla:germec:v:20:y:2019:i:4:p:e523-e544
    DOI: 10.1111/geer.12181
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    References listed on IDEAS

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    1. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603.
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    More about this item

    JEL classification:

    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • H56 - Public Economics - - National Government Expenditures and Related Policies - - - National Security and War

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