Cyber Technology and the Arms Race

Vesa Kanniainen

German Economic Review, 2019, vol. 20, issue 4, e523-e544

Abstract: Cyber technology represents digital military capability with the purpose of causing damage to the military strength of a potential enemy. War using conventional weapons may be preceded by a strike using cyber technology. This paper introduces such technology into the theory of conflicts. The cost of war relative to the payoff from victory turns out to be crucial for the results on armament decisions. In the war game, two types of Nash equilibria may arise. One is subject to warfare while the other is not (‘equilibrium of terror’), depending on the perceived cost of war. In a symmetric war game, cyber capabilities are neutral with respect to the investments in conventional weapons, but they make wars more likely. Asymmetric access to cyber technology limits the international arms race with conventional weapons. A low success probability in the cyber programme encourages exercising the cyberattack option as the enemy may not have access to cyber capability. Uncertainty of the success of a cyber programme makes countries cautious when allocating resources not only to these programmes but also in conventional armament.

Date: 2019
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https://doi.org/10.1111/geer.12181

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Working Paper: Cyber Technology and Arms Race (2017)
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