This paper highlights five areas where economic analysis of terrorism has had the greatest policy relevance during the last 30 years. These areas involve evaluating the effectiveness of counterterrorism actions, identifying the causes of terrorism, measuring the economic ramification of terrorism, analyzing the time-series dynamics of terrorist events, and formulating game-theoretic representat...

In pursuing the above goal, Deterring Terrorism is part of a post-9-11 progression in thought. The initial belief was that terrorist organizations were irrational and therefore undeterrable. This assumption then had a direct impact on counterterrorism policy, which first privileged prevention, preemptive force and eradication over deterrence. This initial paradigm of terror, however, did not la...