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Appendix H: Game Theory and Interdependencies
Pages 116-121

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From page 116...
... Cecilia Yen Koo Professor of Decision Sciences and Public Policy University of Pennsylvania, Philadelphia, Pennsylvania There are certain bad events that can only occur once. COMMON FEATURES OF THE PROBLEM Death is the obvious example: an individual's death is ir There are several different versions of this problem of reversible and unrepeatable.
From page 117...
... For the airline scenario, thorough scanning of viruses or hackers then the incentive for any agent to invest baggage that an airline checks on its own plane will prevent in protection approaches zero. For airline security, if no other damage from these bags, but there could still be an explosive airline has invested in baggage checking systems and there in a bag transferred from another airline.
From page 118...
... The bag in isolation investment in security buys the airline complete was transferred at Frankfurt to a Pan Am feeder line and then freedom from risk. With the possibility of contagion it does loaded onto Pan Am 103 in London's Heathrow Airport.
From page 119...
... Future as we discussed above, the airline which creates the largest research should examine how changes in endogenous probnegative externalities for others should be encouraged to abilities impact on IDS solutions and the appropriate strateinvest in protective behavior not only to reduce these losses gies for improving individual and social welfare. but also to make it profitable for other airlines to follow suit, thus inducing tipping behavior.
From page 120...
... • Structuring the liability system to deal with the contaHere are some problems that fit into this category, some of gion effects of IDS; which have been discussed in this paper: • Carefully designed standards (e.g., building codes for high-rises to withstand future terrorist attacks) that are • Investing in airline security well enforced through mechanisms such as third-party • Protecting against bioterrorist attacks inspections; • Protecting against chemical and nuclear reactor • Introducing federal reinsurance or state-operated pools accidents to provide protection against future losses from terrorist • Making buildings more secure against attacks attacks to supplement private terrorist insurance.
From page 121...
... 2003. "Interdependent Security." Journal 620.


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