| Summary/Abstract |
This paper examines the interaction between a growth-oriented terrorist organization and an uninformed government based on a two-period signalling game. Combining the signalling game and organizational growth approaches of previous contributions, this paper shows that, if a terrorist group follows a growth strategy, it has an incentive to appear weaker than it is by mimicking the behaviour of a smaller organization. Depending on its beliefs about the extent of the terrorist threat, it can be optimal for a government to spend more on second-period counter-terrorism measures if it is not attacked in the first period than if it were attacked.
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