Voluntary participation in a terror group and counterterrorism policy

Abstract

A three-stage game investigates how a government's counterterrorism measures affect potential terrorists interface. In stage 1, the government chooses both proactive and defensive countermeasures, while anticipating the size and attacks of a terrorist group. After radicalized individuals choose whether to join a terrorist group in stage 2, group members then allocate their time between work and terrorism in stage 3. Based on wages and government counterterrorism, the game characterizes the extensive and intensive margins for the terrorist group's size and attacks, respectively. Comparative statics show how changes in wages or population radicalization impact the optimal mix between defensive and proactive countermeasures. Higher (lower) wages favor a larger (smaller) mix of proactive measures over defensive actions. Enhanced radicalization of potential terrorists calls for a greater reliance on defensive actions. Backlash terror attacks stemming from proactive-induced radicalization also affect the mix of counterterrorism actions.