Game Theory for Secure Critical Interdependent Gas-Power-Water Infrastructure

A city's critical infrastructure such as gas, water, and power systems, are largely interdependent since they share energy, computing, and communication resources. This, in turn, makes it challenging to endow them with fool-proof security solutions. In this paper, a unified model for interdependent gas-power-water infrastructure is presented and the security of this model is studied using a novel game-theoretic framework. In particular, a zero-sum noncooperative game is formulated between a malicious attacker who seeks to simultaneously alter the states of the gas-power-water critical infrastructure to increase the power generation cost and a defender who allocates communication resources over its attack detection filters in local areas to monitor the infrastructure. At the mixed strategy Nash equilibrium of this game, numerical results show that the expected power generation cost deviation is 35\% lower than the one resulting from an equal allocation of resources over the local filters. The results also show that, at equilibrium, the interdependence of the power system on the natural gas and water systems can motivate the attacker to target the states of the water and natural gas systems to change the operational states of the power grid. Conversely, the defender allocates a portion of its resources to the water and natural gas states of the interdependent system to protect the grid from state deviations.Comment: 7 pages, in proceedings of Resilience Week 201

Decentralized Protection Strategies against SIS Epidemics in Networks

Defining an optimal protection strategy against viruses, spam propagation or any other kind of contamination process is an important feature for designing new networks and architectures. In this work, we consider decentralized optimal protection strategies when a virus is propagating over a network through a SIS epidemic process. We assume that each node in the network can fully protect itself from infection at a constant cost, or the node can use recovery software, once it is infected. We model our system using a game theoretic framework and find pure, mixed equilibria, and the Price of Anarchy (PoA) in several network topologies. Further, we propose both a decentralized algorithm and an iterative procedure to compute a pure equilibrium in the general case of a multiple communities network. Finally, we evaluate the algorithms and give numerical illustrations of all our results.Comment: accepted for publication in IEEE Transactions on Control of Network System

Network-constrained models of liberalized electricity markets: the devil is in the details

Numerical models for electricity markets are frequently used to inform and support decisions. How robust are the results? Three research groups used the same, realistic data set for generators, demand and transmission network as input for their numerical models. The results coincide when predicting competitive market results. In the strategic case in which large generators can exercise market power, the predicted prices differed significantly. The results are highly sensitive to assumptions about market design, timing of the market and assumptions about constraints on the rationality of generators. Given the same assumptions the results coincide. We provide a checklist for users to understand the implications of different modelling assumptions

Diversification and Endogenous Financial Networks

We test the hypothesis that interconnections across financial institutions can be explained by a diversification motive. This idea stems from the empirical evidence of the existence of long-term exposures that cannot be explained by a liquidity motive (maturity or currency mismatch). We model endogenous interconnections of heterogenous financial institutions facing regulatory constraints using a maximization of their expected utility. Both theoretical and simulation-based results are compared to a stylized genuine financial network. The diversification motive appears to plausibly explain interconnections among key players. Using our model, the impact of regulation on interconnections between banks -currently discussed at the Basel Committee on Banking Supervision- is analyzed

Self-protection and insurance with interdependencies

We study optimal investment in self-protection of insured individuals when they face interdependencies in the form of potential contamination from others. If individuals cannot coordinate their actions, then the positive externality of investing in self-protection implies that, in equilibrium, individuals underinvest in self-protection. Limiting insurance coverage through deductibles or selling “at-fault” insurance can partially internalize this externality and thereby improve individual and social welfare. JEL Classification: C72, D62, D8

Network-constrained models of liberalized electricity markets: the devil is in the details

Numerical models for electricity markets are frequently used to inform and support decisions. How robust are the results? Three research groups used the same, realistic data set for generators, demand and transmission network as input for their numerical models. The results coincide when predicting competitive market results. In the strategic case in which large generators can exercise market power, the predicted prices differed significantly. The results are highly sensitive to assumptions about market design, timing of the market and assumptions about constraints on the rationality of generators. Given the same assumptions the results coincide. We provide a checklist for users to understand the implications of different modelling assumptions.Market power, Electricity, Networks, Numeric models, Model comparison