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Negotiating with Terrorists: The Costs of Compliance


  • Kerim Peren Arin
  • Eberhard Feess
  • Torben Kuhlenkasper
  • Otto F. M. Reich


It is often argued that negotiating with terrorists will encourage terrorist attacks. To date, corroborating empirical evidence is scarce. Using ITERATE data, we investigate the impact of conceding to terrorist demands on terror activity. We restrict attention to hostage events with clear‐cut demands from terrorists. Our sample period runs from 1978 to 2005 and comprises 1435 events in 125 countries. Estimating a flexible and dynamic Structured Additive Regression model, we find that the percentage of successfully negotiated events has a nonlinear effect on future terror intensity consistent with our simple theoretical model. More specifically, although moderate rates of negotiation increase the number of future terror events, higher negotiation rates tend to have the opposite effect. The estimated threshold is around 20%.

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  • Kerim Peren Arin & Eberhard Feess & Torben Kuhlenkasper & Otto F. M. Reich, 2019. "Negotiating with Terrorists: The Costs of Compliance," Southern Economic Journal, John Wiley & Sons, vol. 86(1), pages 305-317, July.
  • Handle: RePEc:wly:soecon:v:86:y:2019:i:1:p:305-317
    DOI: 10.1002/soej.12372

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