Game Theoretic Scenarios of Cybersecurity Investment Models in a Sellers-Buyers Market

Abstract

We develop three economic models that look at sellers in a marketplace. Formulated within this paper is a Nash game, a generalized Nash game and a cooperative game. The sellers compete with one another to sell a higher volume of product to the buyers in the marketplace by investing in cybersecurity. The buyers are influenced by the average cybersecurity level of all sellers. In order to solve the games we calculate the Karush-Kuhn-Tucker (KKT) conditions for each game given that each seller is trying to maximize its own expected utility function. We find that both the Nash and generalized Nash games show similar characteristics when varying parameters of the games. It is also shown that when sellers agree to cooperate in these games their expected utilities are better off than when sellers compete.