A Generalization of Diamond's Inspection Model: Errors of the First and Second Kind

摘要

In many material processing and storing plants an inspector performs during some reference time interval a number of inspections because it can not be excluded that the operator acts illegally by violating agreed rules, e.g., diverts precious or dangerous material. In many situations it is necessary to allow incomplete detections and the possibility of false alarms. In this contribution a model for unobservable interim inspections due to Diamond is extended to include first and second kind errors in case of one or two unannounced interim inspections per reference time interval. In both cases a Nash equilibrium is determined and its properties are discussed. This contribution is also intended to bring Diamonds brilliant idea of solving those kind of games back to awareness.