Algorithms for Interdependent Security Games

Inspired by events ranging from 9/11 to the collapse of the accounting firm Arthur Andersen, economists Kunreuther and Heal [5] recently introduced an interesting game-theoretic model for problems of interdependent security (IDS), in which a large number of players must make individual investment decisions related to security — whether physical, financial, medical, or some other type — but in which the ultimate safety of each participant may depend in a complex way on the actions of the entire population. A simple example is the choice of whether to install a fire sprinkler system in an individual condominium in a large building. While such a system might greatly reduce the chances of the owner’s property being destroyed by a fire originating within their own unit, it might do little or nothing to reduce the chances of damage caused by fires originating in other units (since sprinklers can usually only douse small fires early). If “enough” other unit owners have not made the investment in sprinklers, it may be not cost-effective for any individual to do so.