Abstract

We investigate a mixed economy of an individual rational expert and several naive near-sighted agents in the context of security decision making. Agents select between three canonical security actions (self-protection, self-insurance or passivity) to navigate the complex security risks of weakest-link, best shot and total effort interdependencies. We further study the impact of incomplete information on rational agents' choices. We provide a detailed overview of a methodology to effectively determine and compare strategies and payoffs between the different regimes. To analyze the impact of incomplete information we propose a new formalization. We define the price of uncertainty as the ratio of the expected payoff in the complete information environment to the expected payoff in the incomplete information environment.

• Technical report