Modeling Opponents in Adversarial Risk Analysis

Modeling Opponents in Adversarial Risk Analysis

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Article ID: iaor20161450
Volume: 36
Issue: 4
Start Page Number: 742
End Page Number: 755
Publication Date: Apr 2016
Journal: Risk Analysis
Authors: , ,
Keywords: risk, game theory, decision theory
Abstract:

Adversarial risk analysis has been introduced as a framework to deal with risks derived from intentional actions of adversaries. The analysis supports one of the decisionmakers, who must forecast the actions of the other agents. Typically, this forecast must take account of random consequences resulting from the set of selected actions. The solution requires one to model the behavior of the opponents, which entails strategic thinking. The supported agent may face different kinds of opponents, who may use different rationality paradigms, for example, the opponent may behave randomly, or seek a Nash equilibrium, or perform level‐k thinking, or use mirroring, or employ prospect theory, among many other possibilities. We describe the appropriate analysis for these situations, and also show how to model the uncertainty about the rationality paradigm used by the opponent through a Bayesian model averaging approach, enabling a fully decision‐theoretic solution. We also show how as we observe an opponent's decision behavior, this approach allows learning about the validity of each of the rationality models used to predict his decision by computing the models' (posterior) probabilities, which can be understood as a measure of their validity. We focus on simultaneous decision making by two agents.

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