AN APPLICATION OF GAME THEORY: FUNDING INTERDEPENDENT MC and A UPGRADE DECISIONS

Funding Material, Control and Accountability (MC&A) system upgrades has been identified as a partial solution for mitigating the diversion threat of weapons-grade nuclear material. Effective MC&A system upgrades are dependent on appropriate decisions based on based on funding, implementation, operation and oversight. Traditional MC&A upgrade decisions inherently assumed that all decision-makers possessed similar payoff vectors allowing for a fairly consistent and unified approach to MC&A system enhancements; however, MC&A upgrade projects in non-traditional environments may be required to take into account situations where the potential payoff vectors among decision-makers may be significantly different. Once a decision-maker is required to take into account the decisions of others, the process can be modeled as a game. Game theory has been previously be used to shed light on many aspects of social and economic behavior where a payoff from a set of strategies is dependent on the strategy of others. In this paper, the application of game theory in the context of MC&A upgrades is discussed. Various MC&A upgrades decision payoff matrices for relevant circumstances are evaluated for static (simultaneous) and dynamic (sequential decisions) games. Optimal strategies and equilibrium conditions for these payoff matrices are analyzed. Additional game factors (bargaining, uncertain outcomes, moral hazards) that may affect the outcome of the game are briefly discussed. By demonstrating the application of game theory to a nontraditional environment that may require MC&A upgrades, this work increases the understanding out how outcomes are logically connected to the respective value decision-makers assign to choices.