Counterterrorism policy in an uncertain world

Terrorism prevention is a priority for most democratic polities, however, governments are often unable to precisely assess the threat posed by various terrorist groups. How does a government’s uncertainty about terrorists’ capacity affect the probability of a terror attack occurring? We develop a game-theoretic model to show that the probability of a successful terrorist attack increases when the government expects to face a terror group with low rather than high capacity for violence. This novel result has important implications for how we evaluate the performance of governments and the security agencies in charge of terrorism prevention.