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A cost–benefit analysis of terrorist attacks

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  • Kjell Hausken

Abstract

A cost–benefit analysis of terrorist attacks is developed and placed within a systematic theoretical structure. For the target or object of the attack, we consider the lost value of human lives, lost economic value, and lost influence value, counted as benefits for the terrorist. The corresponding losses for the terrorist are counted as costs. The terrorist attacks if benefits outweigh costs. Bounded rationality is enabled where the three kinds of benefits and costs can be weighted differently. We account for two ex ante probabilities of successful planning and attack, and enable the terrorist to assign different weights to its multiple stakeholders. We introduce multiple time periods, time discounting, attitudes towards risk, and subcategories for the benefits and costs. The cost–benefit analysis is illustrated with the 11 September 2001 attack, and 53 incidents in the Global Terrorism Database yielding both positive and negative expected utilities. The paper is intended as a tool for scientists and policy-makers, as a way of thinking about costs and benefits of terrorist attacks.

Suggested Citation

  • Kjell Hausken, 2018. "A cost–benefit analysis of terrorist attacks," Defence and Peace Economics, Taylor & Francis Journals, vol. 29(2), pages 111-129, February.
    • Handle: RePEc:taf:defpea:v:29:y:2018:i:2:p:111-129
    DOI: 10.1080/10242694.2016.1158440
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    2. Chen, Shun & Zhao, Xudong & Chen, Zhilong & Hou, Benwei & Wu, Yipeng, 2022. "A game-theoretic method to optimize allocation of defensive resource to protect urban water treatment plants against physical attacks," International Journal of Critical Infrastructure Protection, Elsevier, vol. 36(C).
    3. Argenti, Francesca & Landucci, Gabriele & Reniers, Genserik & Cozzani, Valerio, 2018. "Vulnerability assessment of chemical facilities to intentional attacks based on Bayesian Network," Reliability Engineering and System Safety, Elsevier, vol. 169(C), pages 515-530.
    4. Kjell Hausken & Jonathan W. Welburn, 2021. "Attack and Defense Strategies in Cyber War Involving Production and Stockpiling of Zero-Day Cyber Exploits," Information Systems Frontiers, Springer, vol. 23(6), pages 1609-1620, December.
    5. Jaspersen, Johannes G. & Montibeller, Gilberto, 2020. "On the learning patterns and adaptive behavior of terrorist organizations," European Journal of Operational Research, Elsevier, vol. 282(1), pages 221-234.
    6. Adam Behrendt & Vineet M. Payyappalli & Jun Zhuang, 2019. "Modeling the Cost Effectiveness of Fire Protection Resource Allocation in the United States: Models and a 1980–2014 Case Study," Risk Analysis, John Wiley & Sons, vol. 39(6), pages 1358-1381, June.
    7. Zhiheng Xu & Jun Zhuang, 2019. "A Study on a Sequential One‐Defender‐N‐Attacker Game," Risk Analysis, John Wiley & Sons, vol. 39(6), pages 1414-1432, June.
    8. Grant, Matthew J. & Stewart, Mark G., 2017. "Modelling improvised explosive device attacks in the West – Assessing the hazard," Reliability Engineering and System Safety, Elsevier, vol. 165(C), pages 345-354.
    9. Chen, Chao & Reniers, Genserik & Khakzad, Nima, 2019. "Integrating safety and security resources to protect chemical industrial parks from man-made domino effects: A dynamic graph approach," Reliability Engineering and System Safety, Elsevier, vol. 191(C).
    10. Halkos, George & Managi, Shunsuke & Zisiadou, Argyro, 2017. "Analyzing the determinants of terrorist attacks and their market reactions," Economic Analysis and Policy, Elsevier, vol. 54(C), pages 57-73.
    11. Qingqing Zhai & Rui Peng & Jun Zhuang, 2020. "Defender–Attacker Games with Asymmetric Player Utilities," Risk Analysis, John Wiley & Sons, vol. 40(2), pages 408-420, February.
    12. Hausken, Kjell, 2021. "The precautionary principle as multi-period games where players have different thresholds for acceptable uncertainty," Reliability Engineering and System Safety, Elsevier, vol. 206(C).
    13. Halkos, George & Zisiadou, Argyro, 2016. "Exploring the effect of terrorist attacks on markets," MPRA Paper 71877, University Library of Munich, Germany.
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    15. Kjell Hausken, 2020. "Game theoretic analysis of ideologically biased clickbait or fake news and real news," Operations Research and Decisions, Wroclaw University of Science and Technology, Faculty of Management, vol. 30(2), pages 39-57.

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