TASHAROK: using mechanism design for enhancing security resource allocation in interdependent systems

We consider interdependent systems managed by multiple defenders that are under the threat of stepping-stone attacks. We model such systems via game-theoretic models and incorporate the effect of behavioral probability weighting that is used to model biases in human decision-making, as descended from the field of behavioral economics. We then incorporate into our framework called TASHAROK, two types of tax-based mechanisms for such interdependent security games where the central regulator incentivizes defenders to invest well in securing their assets so as to achieve the socially optimal outcome. We first show that due to the nature of our interdependent security game, no reliable tax-based mechanism can incentivize the socially optimal investment profile while maintaining a weakly balanced budget. We then show the effect of behavioral probability weighting bias on the amount of taxes paid by defenders, and prove that higher biases make defenders pay more taxes under the two mechanisms. We then explore voluntary participation in tax-based mechanisms. To evaluate our mechanisms, we use four representative real-world interdependent systems where we compare the game-theoretic optimal investments to the socially optimal investments under the two mechanisms. We show that the mechanisms yield higher decrease in the social cost for behavioral decision-makers compared to rational decision-makers.