Terrorist Signalling and the Value of Intelligence

Abstract

This article presents a model of terrorist attacks as signals where the government is uncertain as to whether it is facing a group that is politically motivated or militant. Pooling equilibriums result with two types of ex post regret: P-regret, where the government concedes to political types that would not subsequently attack; and M-regret, where the government does not concede to militant types that subsequently attack at greater levels. Avoidance of such regret defines a measure of the value of intelligence. Counter-terrorism policy can then be characterized in terms of whether a government should focus on increased intelligence versus increased security (hardening targets). The recommended use of asset freezing is also evaluated in terms of the resources required by terrorists to achieve the various equilibriums. Finally, this article supports the empirical finding of intertemporal substitution of resources by terrorists, concerned with the level of government response to their attacks.

Military aid, direct intervention and counterterrorism

“…In this case, there were significant problems of moral hazard and adverse selection and the Condottieri often found it more profitable to attack the city that hired them, rather than that city's enemies. There is also a literature on asymmetric information games with terrorists (see e.g., Lapan and Sandler (1993) and Arce and Sandler (2007), Arce and Sandler (2010)). Salehyan (2010) uses a principal agent framework, though not a formal model, to examine the choice between attacking an enemy directly and indirectly through the support of insurgents operating in your enemy's country.…”

Secrecy and Deception at Equilibrium, With Applications to Anti‐terrorism Resource Allocation

“…However, deception by terrorists may well occur at equilibrium when the defender is uncertain about the attacker's private information (see for example Lapan and Sandler, 1993;Arce and Sandler, 2007). provide a result that can be viewed as a special case of Proposition 1 above.…”

Strategic Analysis of Terrorism

“…Specifically, terrorist attacks can be viewed as a form of costly signaling, where violence is used as a device to persuade and alter the target audience's beliefs about terrorists' commitment to their cause and their ability to impose costs [4,10,13,16]. Uncertainty often concerns whether terrorist goals are political or ideological [1,9,21].…”

“…Let R denote the terrorists' first-period resources, common to both types and sufficient to mount a spectacular attack, R ≥ R * . In prior signaling models [4,13,14,16], terrorists have resources exogenously available in both the first and second periods; however, part of the purpose of terrorism is to generate future resources and support [1,8,12]. Thus, we model terrorists' second-period resources, contingent upon their first-period actions and the response of the target government.…”

“…As in Arce and Sandler [4], this game contains a (separating) PBE where the government concedes to militant types who attack at the spectacular level and does not concede to political types who attack at the non-spectacular level. There are also (pooling) PBE where both types attack at level A (and the government concedes) or attack at level a (and the government does not concede).…”