Abstract

We study interdependent risks in security, and shed light on the economic and policy implications of increasing security interdependence in presence of reactive attackers. We investigate the impact of potential public policy arrangements on the security of a group of interdependent organizations, namely, airports. Focusing on security expenditures and costs to society, as assessed by a social planner, to individual airports and to attackers, we first develop a game‐theoretic framework, and derive explicit Nash equilibrium and socially optimal solutions in the airports network. We then conduct numerical experiments mirroring real‐world cyber scenarios, to assess how a change in interdependence impact the airports' security expenditures, the overall expected costs to society, and the fairness of security financing. Our study provides insights on the economic and policy implications for the United States, Europe, and Asia.

Highlights

  • Recent initiatives introduced by the Single European Sky ATM Research Programme (SESAR) and the U.S Generation Air Transportation System (NextGen) have mandated an increased use of integrated information and communications technology (ICT) in Air Traffic Management

  • This study shows that the new ICT-based operational initiatives that affect interdependence among airports might be beneficial to small airports, as they can reduce an unfair burden of security expenditures

  • We suppose that Li does not depend on the total number of successful attacks but only on whether there is a single successful attack. This is appropriate for airport security, as a severe incident in an airport is routinely followed by detailed security action and the vulnerable point that caused the incident is removed

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Summary

INTRODUCTION

Recent initiatives introduced by the Single European Sky ATM Research Programme (SESAR) and the U.S Generation Air Transportation System (NextGen) have mandated an increased use of integrated information and communications technology (ICT) in Air Traffic Management. The second type, and the interaction with attacking intensity operating across the network permits the analysis of the effect of different policies on security. In this instance, our interest is in the fairness of the allocation of funding through passenger taxation schemes. Whether collected from the airport or from the state, the final outcome is a flat rate levied on a per-passenger basis (Irish Aviation Authority & Aviasolutions, 2004) ranging from €5 to €7 This levy, as in the U.S model, is, hardly enough to cover the costs: “In 12 of the 13 [European] States with operating deficits [ . This study shows that the new ICT-based operational initiatives that affect interdependence among airports might be beneficial to small airports, as they can reduce an unfair burden of security expenditures

A BRIEF REVIEW OF THE LITERATURE
Funding and Provision Model
MODEL STRUCTURE AND ASSUMPTIONS
General Assumptions about Targets and Attackers
Introducing Interdependence among Targets
Introducing a Social Planner
INTERDEPENDENT SECURITY WITH STRATEGIC ATTACKERS
Equilibrium in Absence of Direct Interdependence
Equilibrium in Presence of Direct Security Interdependence
Analyzing Security Interdependence
NUMERICAL ILLUSTRATIONS
Parameter Calibration
Passengersi
Results of Numerical Experiments
CONCLUSIONS
Full Text
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