Prospect theory and terrorist choice

Article

Phillips, Peter J. and Pohl, Gabriela. 2014. "Prospect theory and terrorist choice." Journal of Applied Economics. 17 (1), pp. 139-160. https://doi.org/10.1016/S1514-0326(14)60006-4
Article Title

Prospect theory and terrorist choice

ERA Journal ID18400
Article CategoryArticle
AuthorsPhillips, Peter J. (Author) and Pohl, Gabriela (Author)
Journal TitleJournal of Applied Economics
Journal Citation17 (1), pp. 139-160
Number of Pages22
Year2014
Place of PublicationLondon, United Kingdom
ISSN1514-0326
Digital Object Identifier (DOI)https://doi.org/10.1016/S1514-0326(14)60006-4
Web Address (URL)http://www.sciencedirect.com/science/article/pii/S1514032614600064
Abstract

We study terrorist choice from the perspective of economics and psychology. Using RAND-MIPT data about the injuries and fatalities inflicted by different terrorist attack methods, we compute sets of preference orderings over the attack methods using prospect theory. This incorporates reference point dependence, risk seeking in the domain of losses, risk aversion in the domain of gains, non-linear preferences and loss aversion into an analysis of terrorist behaviour. We pay particular attention to the importance of a reference point in the context of 'copycat' acts of violence and the influence of loss aversion on the choice of attack method. Our results provide an indication of the types of attack methods that would be chosen by a terrorist whose decision-making process is described by prospect theory and who might, for example, seek to emulate or surpass the actions of a predecessor.

Keywordsprospect theory; terrorism; terrorist choice; copycat acts
ANZSRC Field of Research 2020380113. Public economics - public choice
440804. Defence studies
380304. Microeconomic theory
Public Notes

© 2014 Universidad del CEMA. Published version deposited in accordance with the copyright policy of the publisher.

Byline AffiliationsSchool of Commerce
School of Arts and Communication
Institution of OriginUniversity of Southern Queensland
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