Change search
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf
How to Detect a Salami Slicer: A Stochastic Controller-and-Stopper Game with Unknown Competition
Stockholm University, Faculty of Science, Department of Mathematics.ORCID iD: 0000-0003-3184-2879
Number of Authors: 32022 (English)In: SIAM Journal of Control and Optimization, ISSN 0363-0129, E-ISSN 1095-7138, Vol. 60, no 1, p. 545-574Article in journal (Refereed) Published
Abstract [en]

We consider a stochastic game of control and stopping specified in terms of a process $X_t=-\theta \Lambda_t+W_t$, representing the holdings of Player 1, where $W$ is a Brownian motion, $\theta$ is a Bernoulli random variable indicating whether Player 2 is active or not, and $\Lambda$ is a nondecreasing continuous process representing the accumulated “theft” or “fraud” performed by Player 2 (if active) against Player 1. Player 1 cannot observe $\theta$ or $\Lambda$ directly but can merely observe the path of the process $X$ and may choose a stopping rule $\tau$ to deactivate Player 2 at a cost $M$. Player 1 thus does not know if she is the victim of fraud or not and operates in this sense under unknown competition. Player 2 can observe both $\theta$ and $W$ and seeks to choose a fraud strategy $\Lambda$ that maximizes the expected discounted amount ${\mathbb E} \left [ \left. \int _0^{\tau} e^{-rs} d\Lambda_s \right \vert \theta=1\right ],$ whereas Player 1 seeks to choose the stopping strategy $\tau$ so as to minimize the expected discounted cost ${\mathbb E} \left [\theta \int _0^{\tau} e^{-rs} d\Lambda_s + e^{-r\tau}M\I{\tau<\infty} \right ].$ This non-zero-sum game belongs to a class of stochastic dynamic games with unknown competition and continuous controls and is motivated by applications in fraud detection; it combines filtering (detection), stochastic control, optimal stopping, strategic features (games), and asymmetric information. We derive Nash equilibria for this game; for some parameter values we find an equilibrium in pure strategies, and for other parameter values we find an equilibrium by allowing for randomized stopping strategies.  

Place, publisher, year, edition, pages
2022. Vol. 60, no 1, p. 545-574
Keywords [en]
stochastic game theory, stochastic optimal control, fraud detection, optimal stopping
National Category
Mathematics
Identifiers
URN: urn:nbn:se:su:diva-204667DOI: 10.1137/21M139044XISI: 000790264000002OAI: oai:DiVA.org:su-204667DiVA, id: diva2:1659645
Available from: 2022-05-20 Created: 2022-05-20 Last updated: 2022-05-20Bibliographically approved

Open Access in DiVA

No full text in DiVA

Other links

Publisher's full text

Authority records

Lindensjö, Kristoffer

Search in DiVA

By author/editor
Lindensjö, Kristoffer
By organisation
Department of Mathematics
In the same journal
SIAM Journal of Control and Optimization
Mathematics

Search outside of DiVA

GoogleGoogle Scholar

doi
urn-nbn

Altmetric score

doi
urn-nbn
Total: 24 hits
CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf