Part of Advances in Neural Information Processing Systems 16 (NIPS 2003)
Michael Kearns, Luis E. Ortiz
nspired by events ranging from 9/11 to the collapse of the accounting ﬁrm Arthur Ander- sen, economists Kunreuther and Heal  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, ﬁnan- cial, 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 prop- erty 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.