Abstract
How does incomplete information about counter-terror provisions influence the strategic interaction between a government, terrorist groups, and the citizenry? We investigate this research question using a laboratory experiment and present two key findings. (1) Public counter-terror spending leads citizens to overly frequent “protected” targets such that it makes them easier targets for terrorists. (2) Additionally, we show that citizens over-estimate government counter-terror spending when they are unable to observe it. These findings suggest that asymmetric information and the small probability of a successful terrorist attack may lead to the inefficient provision of counter-terror. We also connect the findings to the larger literature on the principal-agent relationship between citizens and elected officials.
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