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Dealing with Terrorism – Stick or Carrot?

Bruno S. Frey

Emphasising a positive approach to dealing with terrorism (the carrot), this book provides a critique of deterrence policy (the stick) which can be ineffective and even counterproductive, and proposes three alternative and effective anti-terrorist policies: Decentralisation reduces vulnerability to terrorist attacks. A system with many different centres is more stable due to its diversity, enabling one part to substitute for another; Positive incentives can be offered to actual and prospective terrorists not to engage in violent acts. Incentives include: reintegrating terrorists into society, welcoming repentents and offering them valued opportunities; and Diverting attention by naming several terrorist groups potentially responsible for a particular terrorist act. The government thus supplies more information than the terrorist responsible would wish.
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Chapter 4: Putting Policies into Perspective

Bruno S. Frey


TERRORISTS’ INCENTIVES The rational choice approach used in economics can be illustrated by simple graphs. They help us to better understand the effects of changes in anti-terrorist policy. The graphs represent the benefits and the costs of undertaking terrorist acts from the point of view of (potential) terrorists. This allows us to analyse the extent of terrorist acts expected to occur on the basis of analytical reasoning. We first look at the benefits prospective terrorists hope to gain from their acts of terrorism. The following section focuses on the marginal costs of undertaking terrorist acts and the third section merges the two sides and identifies the extent of terrorist acts expected to take place in equilibrium. What Do Terrorists Gain? Figure 4.1 depicts the total benefits and marginal benefits of terrorism to the prospective terrorists as a function of the extent and intensity of terrorism T. The upper part of Figure 4.1 shows that the benefits received by terrorists are the greater the more terrorist acts are undertaken. But these benefits do not increase in a linear way; the additional benefits of additional terrorist acts are getting smaller and smaller. The reason is that terrorists first undertake those terrorist acts producing the greatest benefits. And afterwards have to choose targets promising smaller benefits to them. The marginal benefit curve, MB, in the lower part of the figure reflects the benefits to terrorists of undertaking additional terrorist...

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