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CIAO DATE: 9/5/2006
Counter-Terrorism: A Game Theoretic Analysis
Todd Sandler
February 2004
Center for International Studies University of Southern California
Abstract
This paper establishes the prevalence of deterrence over preemption when targeted governments can choose between either policy or employ both. There is a similar proclivity to favor defensive counterterrorist 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.
