Dziubinski, M. and Goyal, S.

How to Defend a Network?

CWPE1450

Abstract: Modern economies rely heavily on their infrastructure networks. These networks face threats ranging from natural disasters to human attacks. As networks are pervasive, the investments needed to protect them are very large; this motivates the study of targeted defence. What are the 'key' nodes to defend to maximize functionality of the network? What are the incentives of individual nodes to protect themselves in a networked environment and how do these incentives correspond to collective welfare? We provide a characterization of equilibrium attack and defence in terms of two classical concepts in graph theory - separators and transversals. We study the welfare costs of decentralized defence. We apply our results to the defence of the US Airport Network and the London Underground.

Keywords: Infrastructure, costs of conflict, windmill graph, attack, defence

JEL Codes: D10 D80 C70

Author links: Sanjeev Goyal

PDF: https://www.econ.cam.ac.uk/research-files/repec/cam/pdf/cwpe1450.pdf