Generalized Hyperbolic Discounting in Security Games of Timing

Jonathan Merlevede, Benjamin Johnson, Jens Grossklags () and Tom Holvoet
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Jonathan Merlevede: imec-DistriNet, Department of Computer Science, KU Leuven, 3001 Heverlee, Belgium
Benjamin Johnson: School of Computation, Information and Technology, Technical University of Munich, 85748 Garching, Germany
Jens Grossklags: School of Computation, Information and Technology, Technical University of Munich, 85748 Garching, Germany
Tom Holvoet: imec-DistriNet, Department of Computer Science, KU Leuven, 3001 Heverlee, Belgium

Games, 2023, vol. 14, issue 6, 1-52

Abstract: In recent years, several high-profile incidents have spurred research into games of timing. A framework emanating from the FlipIt model features two covert agents competing to control a single contested resource. In its basic form, the resource exists forever while generating value at a constant rate. As this research area evolves, attempts to introduce more economically realistic models have led to the application of various forms of economic discounting to the contested resource. This paper investigates the application of a two-parameter economic discounting method, called generalized hyperbolic discounting, and characterizes the game’s Nash equilibrium conditions. We prove that for agents discounting such that accumulated value generated by the resource diverges, equilibrium conditions are identical to those of non-discounting agents. The methodology presented in this paper generalizes the findings of several other studies and may be of independent interest when applying economic discounting to other models.

Keywords: game theory; games of timing; discounting (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2023
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