Who Should Pay for Interdependent Risk? Policy Implications for Cyber-Physical Security Interdependence in Aviation

29 Pages Posted: 17 Dec 2018

See all articles by Gabriel M. Kuper

Gabriel M. Kuper

University of Trento

Fabio Massacci

DISI - University of Trento

Woohyun Shim

University of Trento; Michigan State University - Department of Telecommunication

Julian M. Williams

Durham Business School

Date Written: November 26, 2018

Abstract

This study addresses various issues in the study of interdependent cyber security, and sheds light on the economic and policy implications of increasing security interdependence. We investigate the impact of a policy arrangement affecting security interdependence on agents' regulated and unregulated actions, and the corresponding costs to society. Focusing on security expenditure issues in the airport network, we first develop a game theory based analytical framework, and derive explicit Nash equilibrium and socially optimal solutions. We then conduct numerical experiments that reflect the real-world context (data from Airport Council International), to assess the impact of a change in interdependence on airports' security expenditures and the overall expected costs to society and the fairness of security financing. Our study provide insights on the economic and policy implications for US, Europe and Asia.

Keywords: Risk Analysis, Game Theory, Cyber Security, Interdependence

JEL Classification: C7, D62, D81

Suggested Citation

Kuper, Gabriel M. and Massacci, Fabio and Shim, Woohyun and Williams, Julian M., Who Should Pay for Interdependent Risk? Policy Implications for Cyber-Physical Security Interdependence in Aviation (November 26, 2018). Available at SSRN: https://ssrn.com/abstract=3290342 or http://dx.doi.org/10.2139/ssrn.3290342

Gabriel M. Kuper

University of Trento ( email )

Via Giuseppe Verdi 26
Trento, Trento 38152
Italy

Fabio Massacci (Contact Author)

DISI - University of Trento ( email )

Via Sommarive 9
Trento, Trento 38123
Italy

HOME PAGE: http://www.massacci.org

Woohyun Shim

University of Trento ( email )

Via Sommarive 14
Trento, TN Trento 38123
Italy

Michigan State University - Department of Telecommunication ( email )

409 Communication Arts & Sciences Building
East Lansing, MI 48824-1212
United States

Julian M. Williams

Durham Business School ( email )

Mill Hill Lane
Durham, Durham DH1 3LB
United Kingdom

Register to save articles to
your library

Register

Paper statistics

Downloads
28
Abstract Views
147
PlumX Metrics