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Journal of Conflict Resolution
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Counterterrorism

A Game-Theoretic Analysis

Daniel G. Arce M.

Department of Economics, Rhodes College

Todd Sandler

School of International Relations, University of Southern California

This article establishes the prevalence of deterrence over preemption when targeted governments can choose between either policies or employ both. There is a similar proclivity to favor defensive counter-terrorist measures over proactive policies. Unfortunately, this predisposition results in an equilibrium with socially inferior payoffs when compared with proactive responses. Proactive policies tend to provide purely public benefits to all potential targets and are usually undersupplied, whereas defensive policies tend to yield a strong share of provider-specific benefits and are often oversupplied. When terrorists direct a disproportionate number of attacks at one government, its reliance on defensive measures can disappear. Ironically, terrorists can assist governments in addressing coordination dilemmas associated with some antiterrorist policies by targeting some countries more often than others.

Key Words: counterterrorism • deterrence • preemption • terrorism • noncooperative game • Nash equilibrium

Journal of Conflict Resolution, Vol. 49, No. 2, 183-200 (2005)
DOI: 10.1177/0022002704272863
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