Abstract
This paper analyzes some implications of very visible, discrete, large-scale terrorist actions, such as the September 11 attacks. By becoming part of the set of common knowledge, such events of mass terror have direct implications on both the supply and composition of the ‘mix’ of terrorist attacks, as well as responses to them. First, we analyze the implications of greater anti-terror operations on the quantity as well as the mix of terrorists supplied by terrorist organizations. Second, we present a novel argument for the role of public announcements in endogenously coordinating responses in the face of a terrorist-hijacking. Public announcements, by injecting strategic uncertainty, can give rise to a Pareto-superior outcome, at minimal resource cost to the government.
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