Nature plays with dice - terrorists do not: Allocating resources to counter strategic versus probabilistic risks

Boaz Golany, Edward H. Kaplan, Abraham Marmur, Uriel G. Rothblum

Research output: Contribution to journalArticlepeer-review

Abstract

Probabilistic 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.

Original languageEnglish
Pages (from-to)198-208
Number of pages11
JournalEuropean Journal of Operational Research
Volume192
Issue number1
DOIs
StatePublished - 1 Jan 2009

Keywords

  • Game theory
  • Resource allocation
  • Risk analysis

ASJC Scopus subject areas

  • General Computer Science
  • Modeling and Simulation
  • Management Science and Operations Research
  • Information Systems and Management

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