To Bargain or Not To Bargain: That Is The Question
We use economic analysis in a simple game-theory framework to ascertain under what circumstances a government would want to precommit itself to a no-negotiation strategy. From the government viewpoint, we examine both the choice of deterrence expenditure (i.e., expense meant to reduce terrorist logistical success during incidents) and whether to negotiate or not.
This is an article from The American Economic Review 78 (1988): 16. Posted with permission.