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DOI: 10.1177/0022002704272193 © 2005 SAGE Publications The Terrorist EndgameA Model with Moral Hazard and LearningDepartment of Political Science, Washington University The author models the relationship between a government and former terrorists as a game with both moral hazard and learning. The government is uncertain about both the former terrorists ability and skill at providing counterterrorism aid. The government has the optionafter observing the success or failure of counterterrorismof replacing the former terrorist leadership with a new negotiating partner. This study demonstrates that the threat of replacement, in addition to promised concessions, provides incentives for former terrorists to exert counterterrorism effort, particularly when the potential replacements are of moderate ability. Furthermore, the author identifies conditions under which governments are likely to replace the former-terrorist leadership with which it has been negotiating. The model also has implications for the effect of counterterrorism successes on future concessions and the impact of the governments ability to consider replacing the former terrorists on concessions and counterterrorism.
Key Words: terrorism counterterrorism moral hazard learning concessions negotiation
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