Daniel G. Arce

Terrorist Signalling and the Value of Intelligence

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.

An Evaluation of Interpol’s Cooperative-Based Counterterrorism Linkages

This paper evaluates the payback from efforts of the International Criminal Police Organization (Interpol) to coordinate proactive counterterrorism measures by its member countries to arrest terrorists and weaken their ability to conduct operations. We use Interpol arrest data and data on utilization of Interpol resources by member countries to compute counterfactual benefit measurements, which, when matched with costs, yield benefit-cost ratios. The average of these ratios is approximately 200 over 12 alternative counterfactual scenarios, so each dollar of Interpol counterterrorism spending returns approximately

Terrorist Spectaculars: Backlash Attacks and the Focus of Intelligence

200. This paper also puts forward a perspective on benefits derived from Interpol’s Stolen and Lost Travel Document database. Interpol provides an inexpensive proactive measure against transnational terrorism that, unlike military operations, does not result in backlash attacks.

IS AGENCY THEORY SELF-ACTIVATING?

This article presents a signaling model of terrorist attacks, where the target government faces a trade-off from its counterterrorism responses and the backlash (counterreaction) that such responses incite. An endogenous characterization of terrorist spectaculars is specified, given a government’s counterterrorism stance and the potential for backlash attacks. In particular, spectacular attacks are pooling, rather than separating, phenomena, whereby the government cannot discern, based on past attacks, the militancy of the terrorist group. The definition for ‘‘spectacular’’ terrorist attacks is inversely related to the government’s toughness and its belief that it confronts a militant group. Policy recommendations are specified for non-event-specific intelligence in relation to the avoidance of spectacular attacks or unnecessary concessions. Intelligence must be focused on the propensity for counterterrorism to give rise to a backlash attack.

A Vintage Model of Terrorist Organizations

This article examines the conditions under which the principal-agent model is self-activating/socially causal. We do so by exploring a principal-agent framework that allows for the possibility that rational agents may hold intrinsic preferences for autonomy in decision making and experience disutility from being monitored. Using a dynamic model of preference formation, we identify conditions under which the principal-agent model is self-activating in that, over time, the introduction of the model in an otherwise efficient monitor-worker relationship leads to the inefficient adoption of the agency model. We also examine the extent to which the agency model is robust when autonomy-preferring agents are introduced into the population. (JEL G30, L20, C72)

Counterterrorism And Its Impact On Terror Support And Recruitment: Accounting For Backlash

A dynamic model of a terrorist organization is presented with the defining feature being that a succession of operatives is recruited at different points in time. Consequently, a government’s counterterror policy must be tailored according to the vintage structure of the terrorist group that it faces. This implies that past history of counterterror policy and attacks matter for the formulation of current and future policy. The authors present the necessary steps to formulate and solve a vintage model, and to deal with the delay differential equations that naturally arise from the vintage structure. The resulting analysis captures the implications of a diverse set of phenomena such as Internet recruiting, training delays for logistically complex plots, age distribution of operatives, and the sensitivity of government impatience/cabinet composition to terrorist events for the inner dynamics of terrorist organizations and counterterror policy. Directions for future research are also suggested.

Strategic analysis of terrorism

This article presents a dynamic model in which counterterrorism policies have the potential to generate positive public support for terrorism via a backlash that may fuel terror recruitment. For an optimizing government aiming at maximizing security, this phenomenon produces a natural bound on proactive counterterror policy that is related to the dynamic path of conflict. Moreover, terror is a persistent phenomenon that requires patience on the part of the target government for optimal counterterror policies to be realized. Finally, the potential for backlash yields insights into the need for target governments to fight an information war to change public opinion regarding its own policies and the ultimate effect of terror attacks.

Correlated strategies as Institutions

Two areas that are increasingly studied in the game-theoretic literature on terrorism and counterterrorism are collective action and asymmetric information. One contribution of this chapter is a survey and extension of continuous policy models with differentiable payoff functions. In this way, policies can be characterized as strategic substitutes (e. g., proactive measures), or strategic complements (e. g., defensive measures). Mixed substitute–complement models are also introduced. We show that the efficiency of counterterror policy depends upon (i) the strategic substitutes-complements characterization, and (ii) who initiates the action. Surprisingly, in mixed-models the dichotomy between individual and collective action may disappear. A second contribution is the consideration of a signaling model where indiscriminant spectacular terrorist attacks may erode terrorists’ support among its constituency, and proactive government responses can create a backlash effect in favor of terrorists. A novel equilibrium of this model reflects the well-documented ineffectiveness of terrorism in achieving its stated goals.

Motivating operatives for suicide missions and conventional terrorist attacks

Two institutions that are often implicit or overlooked in noncooperative games are the assumption of Nash behavior to solve a game, and the ability to correlate strategies. We consider two behavioral paradoxes; one in which maximin behavior rules out all Nash equilibria (‘Chicken’), and another in which minimax supergame behavior leads to an ‘inefficient’ outcome in comparison to the unique stage game equilibrium (asymmetric ‘Deadlock’). Nash outcomes are achieved in both paradoxes by allowing for correlated strategies, even when individual behavior remains minimax or maximin. However, the interpretation of correlation as a public institution differs for each case.

DEFENCE AND PEACE ECONOMICS: THE SECOND DECADE IN RETROSPECT

We investigate the problem of motivating terrorist operatives for suicide missions and conventional terrorist attacks when operatives have either self-interested or social preferences that are not observable by the terrorist organization. We characterize the screening mechanism for selecting operatives according to their social preferences and determine under what conditions a terrorist group will prefer to utilize suicide versus conventional tactics. For example, when operatives are intrinsically motivated and likely to be represented in the pool of potential recruits, a terrorist organization will be more likely to employ suicide attacks as its sole tactic of choice.