The UN in the Lab

We consider two alternatives to inaction for governments combating terrorism, which we term Deterrence and Prevention. Deterrence – investing in resources that reduce the impact of an attack – generates a negative externality to other governments, making their countries a more attractive objective for terrorists, while Prevention – investing in resources that reduce the ability of the terrorist organization to mount an attack – creates a positive externality by reducing the overall threat of terrorism for all. Due to the structure of this interaction, countries can benefit from coordination of policy choices, and international institutions (such as the UN) can be utilized to facilitate coor…