  Rules, regulations, and policies are the basis of civilized society and are
used to coordinate the activities of individuals who have a variety of goals
and purposes. History has taught that over-regulation (too many rules) makes it
difficult to compete and under-regulation (too few rules) can lead to crisis.
This implies an optimal number of rules that avoids these two extremes. Rules
create boundaries that define the latitude an individual has to perform their
activities. This paper creates a Toy Model of a work environment and examines
it with respect to the latitude provided to a normal individual and the
latitude provided to an insider threat. Simulations with the Toy Model
illustrate four regimes with respect to an insider threat: under-regulated,
possibly optimal, tipping-point, and over-regulated. These regimes depend up
the number of rules (N) and the minimum latitude (Lmin) required by a normal
individual to carry out their activities. The Toy Model is then mapped onto the
standard 1D Percolation Model from theoretical physics and the same behavior is
observed. This allows the Toy Model to be generalized to a wide array of more
complex models that have been well studied by the theoretical physics community
and also show the same behavior. Finally, by estimating N and Lmin it should be
possible to determine the regime of any particular environment.
