Interdependent security
Subtitle: a general model
By: Geoffrey Heal, Howard Kunreuther.
Contributors: Kunreuther, Howard.; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 10706; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 10706.
Publisher: National Bureau of Economic Research
Published: 2004
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Airlines -- Security measures -- Cost effectiveness; Airports -- Baggage handling -- Security measures; Security systems -- Cost effectiveness; Communicable diseases -- Control
Description: "In an interdependent world the risks faced by any one agent depend not only on its choices but also on those of all others.  Expectations about others' choices will influence investments in risk-management, and the outcome can be sub-optimal investment all round.  We model this as the Nash equilibrium of a game and give conditions for such a sub-optimal equilibrium to be tipped to an optimal one.  We also characterize the smallest coalition to tip an equilibrium, the minimum critical coalition, and show that this is also the cheapest critical coalition, so that there is no less expensive way to move the system from the sub- optimal to the optimal equilibrium.  We illustrate these results by reference to airline security, the control of infectious diseases via vaccination and investment in research and development"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
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