Risk Analysis, Game Theory, Behavior Theory and Economic Risk

Much of risk analysis has ignored strategic interaction and game theory. The purpose of this research area is to analyze strategically interacting agents involved in accidents, catastrophes, crises, disasters, emergencies, hazards and terrorism. Issues of reliability, risk, safety, security, uncertainty, and vulnerability are taken into accout as well.

Risk analysis research can stereotypically be divided into a technological approach which ignores the behavioral dimension, and a behavioral approach which does not fully appreciate the technological dimension. Limited synergy exists between these two approaches which tend to be fragmentary. This research area realizes that synergy can be improved by identifying a common ground for these two approaches.

The research area focuses on this common ground. On the one hand interaction between intentional actors accounts for the behavioral dimension since intentionality, preferences, beliefs, etc are included. On the other hand this interaction accounts for the technological dimension since the technological approach over the last centuries (e.g. within operations research) has focused on minimizing risk for one unitary actor, which can and should be generalized to scenarios where multiple interacting actors minimize risk. A third approach is economic risk analysis which accounts for strategic interaction, and which can facilitate increasing the synergy between the technological and behavioral approaches.

The research area is divided into eight foci:

  • Different attitudes towards risk interaction of several actors in static and dynamic (over time) situations studied through game theory
  • Behavioral dimension in risk, safety, security, and resilience studied through quantitative analysis tools
  • Players’ attitudes towards risk studied through theoretical and empirical work by e.g. Kahneman and Tversky (1979)
  • Complex systems contain both the technical and human dimension studied through Bayesian probability theory
  • Information Security
  • Strategic Interaction and Societal Safety
  • Power, Conflict, and Risk
  • Probabilistic Risk Analysis and Game Theory

For more information regarding this research area, please read this detailed description.