IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this book chapter

Terrorism: A Game-Theoretic Approach

Listed author(s):
  • Sandler, Todd
  • Arce, Daniel G.

This chapter surveys the past applications of game theory to the study of terrorism. By capturing the strategic interplay between terrorists and targeted governments, game theory is an appropriate methodology for investigating terrorism and counterterrorism. Game theory has been used to examine the interaction among targeted governments, the interface between factions within a terrorist organization, and the interplay between diverse agents (e.g., rival terrorist groups). This chapter identifies a host of externalities and their strategic implications for counterterrorism policies. In addition, the chapter indicates novel directions for applying game theory to terrorism-related issues (e.g., cooperative collectives to strengthen borders). For counterterrorism, we use normal-form games to distinguish proactive from defensive policies. Although both policy types can be represented with similar games, we identify essential strategic differences between these policy classes. When targeted governments must allocate resources among antiterrorism measures, there is generally a dominance of defensive over proactive countermeasures against transnational terrorism. The resulting outcome gives a suboptimal equilibrium. The policy prognosis is much better for domestic terrorism as a central government can internalize externalities among alternative targets. For transnational terrorism, dilemmas also arise when counterterrorism is investigated for continuous choice variables. Too much action is associated with defensive measures, while too little action is associated with proactive measures. This follows because defensive responses are strategic complements, while proactive responses are strategic substitutes for targeted governments. These same strategic concepts are crucial for understanding the interaction among political and military wings of a terrorist group. Game-theoretic notions also inform about interdependent security choices where the safety achieved by one at-risk agent is dependent not only on its precautions but also on those of other agents. Coordination games are particularly appropriate for analyzing the pitfalls of numerous aspects of international cooperation - for example, freezing terrorist assets and denying safe havens. We identify many roadblocks to effective international cooperation. For hostage negotiations, we show that the never-concede policy of governments hinges on at least five unstated assumptions that seldom hold in practice. Thus, even the staunchest proponents of the no-concession policy have reneged under the right circumstances. Ways to bolster adherence are indicated. The chapter also investigates the influence of asymmetric information when terrorists are better informed about the strength of the governments than the other way around. A model is put forward that unifies two alternative approaches based on the terrorists' preferences for revenge or resolution. Recent contributions involving asymmetric information and terrorism are discussed.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

in new window

This chapter was published in:
  • Keith Hartley & Todd Sandler (ed.), 2007. "Handbook of Defense Economics," Handbook of Defense Economics, Elsevier, edition 1, volume 2, number 1, 00.
  • This item is provided by Elsevier in its series Handbook of Defense Economics with number 2-25.
    Handle: RePEc:eee:hdechp:2-25
    Contact details of provider: Web page:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:eee:hdechp:2-25. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.