We consider two alternatives to inaction for governments combating terrorism, which we term Deterrence and Prevention. Deterrence – investing in resources that reduce the impact of an attack – generates a negative externality to other governments, making their countries a more attractive...

We conduct experiments to test the collective action dilemmas associated with defensive and proactive counterterror strategies. Defensive policies are associated with creating public ‘bads’ (e.g., a commons) whereas proactive policies are akin to the voluntary provision of public goods. When...

Political entrepreneurs, or leaders, play an important role in overcoming under-provision and coordination problems inherent in international public goods. Recent examples include the Montreal Protocol on ozone depletion and NATO peacekeeping. We demonstrate that the Prisoner's Dilemma need not...

This paper examines the ability of financial markets to resolve the institutional insufficiency that underlies the credibility problem. We derive necessary conditions for policy credibility in a Barro-Gordon (1983) model where 'market-makers' attempt to earn financial profits from speculation...

This paper is the first systematic examination of (counter)terrorism dynamic games with two types of externalities: temporal and spatial. We consider two types of non-cooperative behavior; one in which national authorities are sensitive with respect to the spatial spillovers of counterterror...