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Deterrence, Preemption, And Panic: A Common-Enemy Problem Of Terrorism

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  • SATYA P. DAS
  • PRABAL ROY CHOWDHURY

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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Suggested Citation

  • Satya P. Das & Prabal Roy Chowdhury, 2014. "Deterrence, Preemption, And Panic: A Common-Enemy Problem Of Terrorism," Economic Inquiry, Western Economic Association International, vol. 52(1), pages 219-238, January.
    • Handle: RePEc:bla:ecinqu:v:52:y:2014:i:1:p:219-238
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    File URL: http://hdl.handle.net/10.1111/ecin.12034
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    References listed on IDEAS

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    1. Das Satya P & Lahiri Sajal, 2006. "A Strategic Analysis of Terrorist Activity and Counter-Terrorism Policies," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 6(1), pages 1-30, June.
    2. Abadie, Alberto & Gardeazabal, Javier, 2008. "Terrorism and the world economy," European Economic Review, Elsevier, vol. 52(1), pages 1-27, January.
    3. Cárceles-Poveda, Eva & Tauman, Yair, 2011. "A strategic analysis of the war against transnational terrorism," Games and Economic Behavior, Elsevier, vol. 71(1), pages 49-65, January.
    4. Richman, J.A. & Cloninger, L. & Rospenda, K.M., 2008. "Macrolevel stressors, terrorism, and mental health outcomes: Broadening the stress paradigm," American Journal of Public Health, American Public Health Association, vol. 98(2), pages 323-329.
    5. Hausken, Kjell, 2008. "Whether to attack a terrorist's resource stock today or tomorrow," Games and Economic Behavior, Elsevier, vol. 64(2), pages 548-564, November.
    6. 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.
    7. Mirza, Daniel & Verdier, Thierry, 2006. "International trade, security, and transnational terrorism : theory and empirics," Policy Research Working Paper Series 4093, The World Bank.
    8. 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.
    9. Gary S. Becker & Yona Rubinstein, 2011. "Fear and the Response to Terrorism: An Economic Analysis," CEP Discussion Papers dp1079, Centre for Economic Performance, LSE.
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    Cited by:

    1. B. Hoyer, 2012. "Network Disruption and the Common Enemy Effect," Working Papers 12-06, Utrecht School of Economics.
    2. Bandyopadhyay, Subhayu & Sandler, Todd, 2023. "Voluntary participation in a terror group and counterterrorism policy," Journal of Economic Behavior & Organization, Elsevier, vol. 215(C), pages 500-513.
    3. Aditya Bhan & Tarun Kabiraj, 2019. "Operational externalities and counter-terrorism," Indian Economic Review, Springer, vol. 54(1), pages 171-187, June.
    4. Garcia-Alonso, Maria D.C. & Levine, Paul & Smith, Ron, 2016. "Military aid, direct intervention and counterterrorism," European Journal of Political Economy, Elsevier, vol. 44(C), pages 112-135.
    5. Bhan, Aditya & Kabiraj, Tarun, 2018. "Countering Terror Cells: Offence versus Defence," MPRA Paper 88873, University Library of Munich, Germany.
    6. Yang Jiao & Zijun Luo, 2019. "A model of terrorism and counterterrorism with location choices," Public Choice, Springer, vol. 179(3), pages 301-313, June.
    7. Kumar, Dushyant & Roy Chowdhury, Prabal, 2022. "Winning hearts and minds in conflict-ridden areas: Development as a signal of benevolence," Economic Modelling, Elsevier, vol. 117(C).

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    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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