Prospect theory and terrorist choice

Phillips, Peter J. and Pohl, Gabriela (2014) Prospect theory and terrorist choice. Journal of Applied Economics, 17 (1). pp. 139-160. ISSN 1514-0326

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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.

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Item Type:	Article (Commonwealth Reporting Category C)
Refereed:	Yes
Item Status:	Live Archive
Additional Information:	© 2014 Universidad del CEMA. Published version deposited in accordance with the copyright policy of the publisher.
Faculty/School / Institute/Centre:	Current - Faculty of Business, Education, Law and Arts - School of Commerce (1 July 2013 -)
Faculty/School / Institute/Centre:	Current - Faculty of Business, Education, Law and Arts - School of Commerce (1 July 2013 -)
Date Deposited:	24 Jun 2014 06:36
Last Modified:	04 Jul 2016 05:13
Uncontrolled Keywords:	prospect theory; terrorism; terrorist choice; copycat acts
Fields of Research (2008):	14 Economics > 1402 Applied Economics > 140213 Public Economics-Public Choice 16 Studies in Human Society > 1606 Political Science > 160604 Defence Studies 14 Economics > 1401 Economic Theory > 140104 Microeconomic Theory
Socio-Economic Objectives (2008):	A Defence > 81 Defence > 8101 Defence > 810107 National Security E Expanding Knowledge > 97 Expanding Knowledge > 970114 Expanding Knowledge in Economics E Expanding Knowledge > 97 Expanding Knowledge > 970116 Expanding Knowledge through Studies of Human Society
Identification Number or DOI:	10.1016/S1514-0326(14)60006-4
URI:	http://eprints.usq.edu.au/id/eprint/25305

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