Not yet reviewed by Pith; the record is open.

Honeypot is an important cyber defense technique that can expose attackers new attacks. However, the effectiveness of honeypots has not been systematically investigated, beyond the rule of thumb that their effectiveness depends on how they are deployed. In this paper, we initiate a systematic study on characterizing the cybersecurity effectiveness of a new paradigm of deploying honeypots: blending honeypot computers (or IP addresses) into production computers. This leads to the following Honeypot Deployment (HD) problem, How should the defender blend honeypot computers into production computers to maximize the utility in forcing attackers to expose their new attacks while minimizing the loss to the defender in terms of the digital assets stored in the compromised production computers? We formalize HD as a combinatorial optimization problem, prove its NP hardness, provide a near optimal algorithm (i.e., polynomial time approximation scheme). We also conduct simulations to show the impact of attacker capabilities.