@article{Stranlund:14505,
      recid = {14505},
      author = {Stranlund, John K. and Field, Barry C.},
      title = {On the Production of Homeland Security Under True  Uncertainty},
      address = {2006},
      number = {1669-2016-136453},
      series = {ResEc Working Paper 2006-5},
      pages = {23},
      year = {2006},
      abstract = {Homeland security against possible terrorist attacks  involves making decisions under true uncertainty. Not only  are we ignorant of the form, place, and time of potential  terrorist attacks, we are also largely ignorant of the  likelihood of these attacks. In this paper, we  conceptualize homeland security under true uncertainty as  society's immunity to unacceptable losses. We illustrate  and analyze the consequences of this notion of security  with a simple model of allocating a fixed budget for  homeland security to defending the pathways through which a  terrorist may launch an attack and to mitigating the damage  from an attack that evades this defense. In this problem,  immunity is the range of uncertainty about the likelihood  of an attack within which the actual expected loss will not  exceed some critical value.  We analyze the allocation of a  fixed homeland security budget to defensive and mitigative  efforts to maximize immunity to alternative levels of  expected loss. We show that the production of homeland  security involves a fundamental trade-off between immunity  and acceptable loss; that is, for fixed resources that are  optimally allocated to defense and mitigation, increasing  immunity requires accepting higher expected losses, and  reducing acceptable expected losses requires lower  immunity. Greater investments in homeland security allow  society to increase its immunity to a particular expected  loss, reduce the expected losses to which we are immune  while holding the degree of immunity constant, or some  combination of increased immunity to a lower critical  expected loss.},
      url = {http://ageconsearch.umn.edu/record/14505},
      doi = {https://doi.org/10.22004/ag.econ.14505},
}