"Look like the innocent flower, but be the serpent under't": Mimicking behaviour of growth-oriented terrorist organizations

This paper examines the interaction between a growth-oriented
terrorist organization and an uninformed government based on a
two-period signaling game. The terrorists, taking into account the
government's counter-terrorism response to first period attacks,
gain additional manpower from successful attacks and choose their
strategy to maximize the available manpower at the end of period 2.
The government tries to infer the terrorist organization's size
from the terrorists' attack choice it observes in period 1 and
adjusts its second period counter-terrorism spending according to
the perceived threat of terrorism. Combining the signaling 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. Furthermore, 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 than if it were attacked. The
behaviour of contemporary terrorist groups suggests that the
assumptions of a growth strategy and mimicking behaviour are
justified.