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Terrorism, Counterterrorism and Optimal Striking Rules

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We study a simple mechanism design problem that describes the optimal behavior of a country targeted by a foreign terrorist group. The country is uncertain about the terrorists’ strength and may decide to acquire such information from the community hosting the terrorists. We highlight a novel trade-off between target hardening – i.e., mitigating the incidence of an attack by strengthening internal controls and improving citizens’ protection – and preemptive military measures aimed at eradicating the problem at its root – i.e., a strike in the terrorists’ hosting country. We show that, conditional on being informed about the terrorists’ strength, the country engages in a preemptive attack only when it faces a sufficiently serious threat and when the community norms favoring terrorists are weak. Yet, in contrast with the existing literature, we show that it is optimal for the country to acquire information only when these norms are strong enough and when its prior information about the terrorists’ strength is sufficiently poor.

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Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 470.

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Date of creation: 07 Apr 2017
Handle: RePEc:sef:csefwp:470
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  1. Todd Sandler, 2015. "Terrorism and counterterrorism: an overview," Oxford Economic Papers, Oxford University Press, vol. 67(1), pages 1-20.
  2. Eli Berman & Jacob N. Shapiro & Joseph H. Felter, 2011. "Can Hearts and Minds Be Bought? The Economics of Counterinsurgency in Iraq," Journal of Political Economy, University of Chicago Press, vol. 119(4), pages 766-819.
  3. Chen Wang & Vicki M. Bier, 2011. "Target-Hardening Decisions Based on Uncertain Multiattribute Terrorist Utility," Decision Analysis, INFORMS, vol. 8(4), pages 286-302, December.
  4. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2015. "The Economics Of Counterterrorism: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(1), pages 131-157, February.
  5. Powell, Robert, 2006. "War as a Commitment Problem," International Organization, Cambridge University Press, vol. 60(01), pages 169-203, January.
  6. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, January.
  7. Enders, Walter & Sandler, Todd, 1995. "Terrorism: Theory and applications," Handbook of Defense Economics,in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 1, chapter 9, pages 213-249 Elsevier.
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