Summary of Socially Optimum Condition

Allocating a Total Defensive Expenditure among Multiple Independent Sites.

Equate the marginal expected social costs avoided (MESCA) across sites; possibly no protection at some sites.

Advanced Persistent Threat: Technological or Behavioral Constraint on Probability or Cost Reduction.

Technological or behavioral constraints can result in an optimal inequality among sites even where investment occurs.

Allocation of Expenditures Across Damage and Probability-Reducing Activities.

Equate the marginal social cost avoided of each type of expenditure where expenditures are positive (some may be below threshold).

Public Goods, Border control and Positive Interdependencies.

Invest until the sum of their marginal damage cost avoided equals the individual site MESCA.

Site Interdependencies Due to Displacing the Probability of Attack.

Determine the net MESCA, net of probability increasing effects at other sites; sites of attack may be spread but social costs reduced.

Multiple Sources of Probability (All Hazards) and Cost, as with false positives and false negatives from behavioral controls.

The form of the allocation decision is the same (e.g. equate MESCA), but all costs and probabilities should be taken into account.