Abstract

Game Theory and Risk Analysis for the Smallpox Threat

David Banks, (U.S. Food and Drug Admin.), ` banksd@cber.fda.gov`

**Abstract**

Federal agencies must allocate their limited resources for counterterrorism programs in the most effective ways possible. These decisions entail both statistical risk analysis, to account for uncertainties in the costs and benefits of particular efforts, and game theory, to account for the fact that terrorists adapt their attacks in response to homeland defense initiatives. This talk describes a procedure that uses risk analysis to generate random payoff matrices for game theory solution, and then pools the solutions from multiple realizations to estimate the probability that a given play is optimal. The strategy is illustrated for risk management of the threat of smallpox attacks.

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