Terrorism & Game Theory

Todd Sandler and Daniel G. Arce M., Simulation Gaming 2003; 34; 319

Summary:
The authors postulate that game theory is a useful tool to analyze both the actions of terrorists and a government's response to terrorism. Terrorists respond to how governments respond to them, and vice versa; thus by using game theory to study terrorism, the analyst may be able to come to some conclusions as to which actions are appropriate for a government to take to mitigate the threat of terrorism.

The article highlights 6 reasons why game theory is appropriate to the study of terrorism:

1. Game theory captures the strategic interactions between terrorists and a targeted government, where actions are interdependent and, thus, cannot be analyzed as though one side is passive.
2. Strategic interactions among rational actors, who are trying to act according to how they think their counterparts will act and react, characterize the interface among terrorists (hardliners vs. moderates) or among alternative targets (various governments).
3. In terrorist situations, each side issues threats and promises to gain a strategic advantage.
4. Terrorists and governments abide by the underlying rationality assumption of game theory, where a player maximizes a goal subject to constraints.
5. Game-theoretic notions of bargaining are applicable to hostage negotiations and terrorist campaign-induced negotiations over demands.
6. Uncertainty and learning in a strategic environment are relevant to all aspects of terrorism, in which the terrorists or government or both are not completely informed.

As an example of using game theory to re-assess a governments policy towards terrorism, the article investigates the usefulness of the "no-negotiation" policy. The logic of the no-negotiation policy is that terrorists will not take hostages if there is nothing to gain from the undertaking, i.e. a government will not concede to their demands. By using game theory to develop a model of this policy, however, it becomes quickly apparent that the policy is of little value in deterring terrorists. Terrorists may still perceive the taking of hostages as beneficial to them for a variety of reasons, "If a sufficiently important person is secured, then the government may regret its no-negotiation pledge because the expected costs of not capitulating may exceed that of capitulating...Even when the government's pledge not to negotiate is believed by the terrorists, a fanatical group may still engage in a hostage mission when a positive payoff is associated with either a logistical or negotiation failure by advertising the cause or achieving martyrdom...The effectiveness of the no-negotiation policy hinges on the credibility of the government's pledge, the absence of incomplete information, the terrorists' gains being solely tied to a negotiation success, and sufficient deterrence spending to eliminate logistical success."

Game theory also exposes a paradox in the cooperation of governments in response to terrorism. "Although the US is the target of approximately 40% of all transnational terrorist attacks, virtually all of these attacks occurred abroad in recent years [prior to 2003], with 9/11 being a noticeable exception. US over deterrence means that it experiences attacks where it has little authority to do anything about them." Also highlighted is the seemingly contradictory effect that as nations share intelligence on terrorists to increase deterrence, they in fact "transfer the attacks abroad." By not sharing intelligence AND coordinating deterrence, nations "waste resources without necessarily increasing security."

Ultimately, game theory exposes flaws in policies that may not deter terrorist attacks as well as initially perceived By addressing these flaws, decision-makers can make their respective counterterrorism policies more effective.

Authors Comment: This article recommends game theory as a tool to reassess policy, which is not the role of the intelligence analyst. However, by using game theory in tandem with a knowledge of our own policies towards terrorism, the intelligence analyst may be able to better forecast where an attack is likely to occur (whether at home or abroad), the modus operandi of the attack, and perhaps what terrorists are trying to achieve. According to game theory, terrorists will always seek the highest payoffs for them, and thus the analyst can seek to identify these payoffs, how they are likely to be achieved, and inform the decision maker as to how to best prevent their achievement.