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Games, Risks, and Analytics: Several Illustrative Cases Involving National Security and Management Situations

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  • M. Elisabeth Paté-Cornell

    (Department of Management Science and Engineering, Stanford University, Stanford, California 94305)

Abstract

This paper presents and compares four models of games and risk analyses designed to support strategic and policy decisions, three focusing on national security issues and one on project management. They share a common core of probability, linked decisions among the parties involved, and risks to a principal decision maker. Their structure is based on systems and decision analysis. Their level of complexity depends on the strategies, the environment, and assumptions of variation over time of probabilities, preferences, and options. They are part of the field of analytics and some of its real-life applications. The first model is based on a one-move game, in which the United States faces risks of terrorist attacks by several possible groups using various types of weapons. The result is a probabilistic ranking, at a given time, of the threat posed by these weapons. The second model is a dynamic simulation of counterterrorism scenarios in an alternate game between a government and a terrorist group. The objective is to compare the stabilizing effects of different short- and long-term government strategies. The third model is a dynamic evaluation of nuclear counterproliferation strategies involving an analysis of the weapon development program of a particular country with evolving intent and capabilities and of the effectiveness of different U.S. strategies to prevent or delay its success. The fourth model is a principal--agent representation of the development of an engineered system, in which an agent in charge of part of the project may consider meeting a deadline by cutting corners if he falls behind schedule, generally increasing the system failure probability. The goal is to support the decisions of the manager in setting constraints and incentives. This paper shows how a set of similar game and risk analysis models at different levels of complexity can provide valuable insights to decision makers, both in national security and management situations, and help them avoid mistakes such as excessive focus on the short term and underestimation of dependencies. It compares their capabilities, including the number of moves, dynamics of the underlying situation, possible changes of context, actors' preferences and strategic options, and risk characterization.

Suggested Citation

  • M. Elisabeth Paté-Cornell, 2012. "Games, Risks, and Analytics: Several Illustrative Cases Involving National Security and Management Situations," Decision Analysis, INFORMS, vol. 9(2), pages 186-203, June.
    • Handle: RePEc:inm:ordeca:v:9:y:2012:i:2:p:186-203
    DOI: 10.1287/deca.1120.0241
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    References listed on IDEAS

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