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Deterrence, Preemption and Panic: A Common-Enemy Problem of Terrorism

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Author Info
Das, Satya P.
Roy Chowdhury, Prabal

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Abstract

We develop a game-theoretic analysis of terrorism that examines the interaction between a terrorist organization and multiple target countries, and considers both pre-emption and deterrence as counter-terrorist policies. The damage from terror includes not only the material cost of fatality, injury and loss of property, but also the resultant fear. The fear-effect leads to different kinds of equilibria and implications for counter-terrorism policies. In particular, the model identifies conditions under which greater pre-emption may be the rational response to an increase in terrorism, i.e., it analyzes the merit of the dictum: ``offense is the best defense.'' Further, it examines the characteristics of cooperative behavior among target countries in dealing with the threat of terrorism.

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File URL: http://mpra.ub.uni-muenchen.de/8223/
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 8223.

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Date of creation: 2008
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Handle: RePEc:pra:mprapa:8223

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Find related papers by JEL classification:
H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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  1. Todd Sandler & Kevin Siqueira, 2006. "Global terrorism: deterrence versus pre-emption," Canadian Journal of Economics, Canadian Economics Association, vol. 39(4), pages 1370-1387, November. [Downloadable!] (restricted)
  2. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March. [Downloadable!]
  3. Alberto Abadíe & Javier Gardeazábal, 2005. "Terrorism and the World Economy," DFAEII Working Papers 200519, University of the Basque Country - Department of Foundations of Economic Analysis II. [Downloadable!]
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  4. Satya Das & Sajal Lahiri, 2006. "A Strategic Analysis of Terrorist Activity and Counter-Terrorism Policies," Topics in Theoretical Economics, Berkeley Electronic Press, vol. 6(1), pages 1295-1295. [Downloadable!] (restricted)
  5. Mirza, Daniel & Verdier, Thierry, 2006. "International trade, security, and transnational terrorism : theory and empirics," Policy Research Working Paper Series 4093, The World Bank. [Downloadable!]
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