This model examines the role of intelligence gathering and screening in providing airport security. We analyze this problem using a game between the government and a terrorist. By investing in intelligence gathering, the government can improve the precision of its information. In contrast, screening can be used to search a passenger and thereby deter terrorist attacks. We determine the optimal allocation of resources between these two strategies wherein we model the role of intelligence using the concept of supermodular precision. One striking result is that under certain circumstances, an increase in the investment in intelligence can induce a more devious terrorist to attack with a higher probability. We also find that when there is a cost-reducing innovation in the screening technology, then the optimal investment in intelligence gathering can go either way. However, such an innovation unambiguously improves social welfare. Another interesting implication is that a developed economy would value intelligence inputs more than a developing economy. We also examine the efficacy of a program such as PreCheck that allows some select passengers expedited screening in exchange for voluntarily revealing information about themselves. Our analysis shows that such a program can be used to cushion the adverse effect of budgetary shortages. Finally, we also examine the role of enhanced punishment on the optimal level of intelligence. We find that the result can go both ways. If the initial level of punishment is high, then any further enhancement reduces the optimal level of intelligence gathering. However, this result is reversed if the initial level of punishment is low.

Does an emergency such as a natural disaster lead to a surge of terrorism? This paper contributes to the emerging literature on this issue. We consider the experience of 129 countries during the period 1998–2012 to determine the effect of a natural disaster on both domestic as well as transnational terrorism. We also control for endogeneity using expenditure on health care and land area in a country as instruments. In contrast to the existing literature, we measure the extent of terrorism by the value of property damage. The results indicate that after natural disasters, (a) transnational terrorism increases with a lag, and (b) a statistically significant impact on domestic terrorism is not observed.