Impact of intelligence on target-hardening decisions

We present a game-theoretic model to explore how intelligence about terrorist preferences can affect optimal resource allocations for infrastructure protection. We consider a dynamic game with incomplete information in which the defender chooses how to allocate her defensive resources and then an attacker chooses which target to attack according to a multi-attribute utility function. Our model allows for both defender uncertainty about the attacker weights on the various attributes in the attacker utility function, and also defender ignorance about unobserved attributes that may be important to the attacker, but have not been identified by the defender. In the second period, the defender also has an opportunity to update her knowledge in a Bayesian manner from actual (or attempted) attacks observed in the first period. Using this model, we can explore how much the defender would be willing to pay for perfect intelligence that resolves all of her uncertainty, as well as the value of imperfect intelligence about attacker preferences gained by observing previous attacks.