THE IMPACT OF SOCIETAL RISK ATTITUDES ON TERRORISM AND COUNTERTERRORISM

In: Economics & politics, Band 21, Heft 3, S. 433-451

Abstract

We analyze decisions made by a group of terrorists and a target government in a zero‐sum game in which the terrorists minimize, and the government maximizes, the expected utility of the median voter in the target country. The terrorists' strategy balances the probability and the severity of the attack while the government chooses the level of investment reducing the probability and/or mitigating the severity of attacks. We find that risk aversion affects the strategies of both the government and the terrorists, leading to more severe, less frequent attacks but not necessarily more counterterrorism expenditures.