Playing for Resilience

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INDUSTRIAL ENGINEERING – VOLUME: 47 NUMBER: 6
By Jun Zhuang and Laura Devine

With the rising trend of natural disasters and terrorism, a clear analysis of what to be done and how to do it is imperative. In analyzing such uncertain situation, game theory, combined with other methods, may prove to be handy. Game theory is a ranch of applied mathematics that attempts to capture behavior in strategic situations mathematically by structuring them into game-like elements like players, rules, outcomes, payoffs, and information.

Natural disasters can and will result in losses. Government agencies, private and nonprofit sectors, and residents must work together to meet the needs should natural disasters occur. However, without clear guidelines, all these parties may make decisions independently and affect each other in negative ways. Therefore, game theory can be used to model the interaction between these parties, resulting in a policy that will accommodate all parties involved and attain the goal of disaster management.

Terrorism, an issue that seems to grow even worse each day, requires many investments in defense to counter. However, with a limited budget, protecting against natural disasters and terrorism has to be balanced. Game theory can be used to model the interaction of terrorist groups and governments by thinking of it as a game of attacker-defender. By doing so, governments (defender) can understand how to allocate security spending optimally to reduce the probability of damage from terrorists (attacker).