Game Theory and Terrorism

On September 11th, 2001, terrorists attacked the World Trade Center towers, killing thousands of innocent people. Since then, there have been many initiatives taken by countries around the world to counter terrorism. According to CFO Magazine, these initiatives are effective at eliminating organized terror networks but have encourage the growth of smaller terror plots/organizations.

Game theory is all about information, decisions and payoffs. A rational person will choose a choice that provides him/her with the greatest payoff. Each individual's payoff is affected by the decisions of other players in the game. When there are low transactions (communication) costs, the game will likely provide the most efficient outcome.

This theory applies to terrorist cells. Large terrorist cells and terror plots involve many people and require significant coordination. Because of this, the larger terrorist cells have an increased chance of getting caught by western intelligence groups. This means that the payoff is now riskier for large terror networks/plots. This causes terrorist to shrink the size of their terror networks and the size of terror plots. A smaller terror plot will have less of a chance of getting caught because it will not require as much communication, planning or coordination. This decreased risk probably makes the terror plot more valuable to terrorists. In summary, we see that game theory can describe the decisions of terror networks.


Dave Tufte said...

Su Jung Poe 94/100 ("choose a choice" is kludgy, and means nothing without context: your ideas need to stand on their own).

I think you've only started to scratch the surface of the game theory.

Is this game simultaneous or sequential? By arguing that smaller cells result from tougher policies, you're implying that it's sequential. You could even add an earlier layer with the decision to attack (or not attack).

What do the payoffs look like? You've only discussed the possibility of the strategy choices by terrorists after the choice of a tougher enforcement strategy. What about the payoffs for not changing strategy?

Ted said...

I really liked the topic of game theory and how it relates to terrorism. I think that it is important to realize that terrorism can be thought of as both a simultaneous-move game, and a sequential move game. Let me explain... Terrorism can be simultaneous in the fact multiple terror organizations / terrorists can have plots against an organization without knowledge of the other terror attacks. Then once initial terror attacks take place, a sequential-move game begins in response to the initial attack. For instance... multiple terror organizations plan multiple independent attacks (simultaneous-move). The victim / receiver of these attacks then has the choice to retaliate. The terror organization responds to the retaliation of the victim (sequential-move).... And while all of this is going on multiple terror organizations are still working and retaliating independently of each other.
The independence and overlapping of terrorism is why the topic is scary and difficult to talk about. I think that you chose a great topic that relates to global economics, and strategy.

Dave Tufte said...

Ted: 50/50

You're absolutely right Ted.

There's actually a ton of research in game theory about how to think through the motivations for terrorism and responses to it.

A lot of this is higher level stuff, but an accessible starting point might be Laitin's (extended) review of Enders and Sandler's The Political Economy of Terrorism that appeared in the Journal of Economic Literature in 2006.

I hope it's obvious that this is a suggestion for someone who's really interested, and not recommended reading for everyone.