Jump to ContentJump to Main Navigation
Show Summary Details
More options …

Schneider, Friedrich

Open Economics

1 Issue per year

Open Access
See all formats and pricing
More options …

The Deferral of Attacks: SP/A Theory as a Model of Terrorist Choice when Losses Are Inevitable

Peter J. Phillips / Gabriela Pohl
  • School of Humanities and Communication, University of Southern Queensland, West Street, Toowoomba, Queensland, Australia
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
Published Online: 2018-02-07 | DOI: https://doi.org/10.1515/openec-2018-0001


When a terrorist group’s aspirations far exceed the outcomes that can be expected to result from any of the available attack methods, an outcome below the terrorist group’s aspiration level is inevitable. A primary prediction of SP/A theory when applied to the study of terrorist behaviour is that when losses are inevitable the terrorist group will be risk averse and inclined to defer further action until expected outcomes improve, new attack method innovations are developed or the memory of the event that shaped aspirations has faded sufficiently that the aspiration level can be ‘reset’. This complements existing predictions of loss aversion and risk seeking behaviour over the domain of avoidable losses and provides a starting point for developing explanations for patterns of behaviour that are observed in the terrorism context, including pauses in violence, even during brutality contests, and time-lags between terrorist attacks.

Keywords: SP/A Theory; Terrorist Behaviour; Risk; Uncertainty; Inevitable Losses; Aspiration; Brutality; Violence; Contests; Attacks; Avoidable Losses


  • Abdellaoui, M. 2000. Parameter-free Elicitation of Utility and Probability Weighting Functions. Management Science, 46, 1497-1512.CrossrefGoogle Scholar

  • Allais, M. 1953. Le Comportement de l’Homme Rationnel devant le Risque, Critique des Postulats et Axiomes de l’Ecole Americaine. Econometrica, 21, 503-546.Google Scholar

  • Barberis, Nicholas C. 2013. Thirty Years of Prospect Theory in Economics: A Review and Assessment. Journal of Economic Perspectives, 27, 173-96.CrossrefGoogle Scholar

  • Battalio, R.C., Kagel, J.H. & MacDonald, D.N. 1985. Animals’ Choices over Uncertain Outcomes: Some Initial Experimental Results. American Economic Review, 75, 597-613.Google Scholar

  • Bell, D.E. 1982. Regret in Decision-Making Under Uncertainty. Operations Research, 30, 961-981.CrossrefGoogle Scholar

  • Berns, G.S., Capra, C.M., Chappelow, J., Moore, S. & Noussair, C. 2008. Nonlinear Neurobiological Probability Weighting Functions for Aversive Outcomes. NeuroImage, 39, 2047-2057.Google Scholar

  • Birnbaum, M.H., Patton, J.N. & Lott, M.K. 1999. Evidence against Rank-Dependent Utility Theories: Tests of Cumulative Independence, Interval Independence, Stochastic Dominance and Transitivity. Organisational Behaviour and Human Decision Processes, 77, 44-83.Google Scholar

  • Bosch-Doménech, A. & Silvestre, J. 2006. Reflections on Gains and Losses: A 2×2×7 Experiment. Journal of Risk and Uncertainty, 33, 217-235.Google Scholar

  • Bruhin, A., Fehr-Duda, H. & Epper, T. 2010. Risk and Rationality: Uncovering Heterogeneity in Probability Distortion. Econometrica, 78, 1375-1412.Google Scholar

  • Caruso, R. & Schneider, F. 2013. Brutality of Jihadist Terrorism: A Contest Theory Perspective and Empirical Evidence for the Period 2002 to 2010. Journal of Policy Modeling, 35, 685-696.Google Scholar

  • Camerer, C.F. & Ho, T.H. 1994. Violations of the Between-ness Axiom and Non-Linearity in Probability. Journal of Risk and Uncertainty, 8, 167-196.Google Scholar

  • Das, S., Markowitz, H., Scheid, J. & Statman, M. 2010. Portfolio Optimisation With Mental Accounts. Journal of Financial and Quantitative Analysis, 45, 311-334.Google Scholar

  • Diecidue, E. & van de Ven, J. 2008. Aspiration Level, Probability of Success and Failure and Expected Utility. International Economic Review 49, 683-700.Google Scholar

  • Ellsberg, D. 1954. Classic and Current Notions of Measurable Utility. Economic Journal, 64, 528-556.CrossrefGoogle Scholar

  • Ellsberg, D. 1961. Risk, Ambiguity and the Savage Axioms. Quarterly Journal of Economics, 75, 643-669.Google Scholar

  • Enders, W. & Sandler, T. 2002. Patterns of Transnational Terrorism, 1970-1999: Alternative Time-Series Estimates. International Studies Quarterly, 46, 145-165.Google Scholar

  • Fishburn, P.C. 1989. Retrospective on the Utility Theory of von Neumann & Morgenstern. Journal of Risk and Uncertainty, 2, 127-158.CrossrefGoogle Scholar

  • Frey, B. & Luechinger, S. 2003. How to Fight Terrorism: Alternatives to Deterrence. Defence and Peace Economics, 14, 237-249.CrossrefGoogle Scholar

  • Gonzalez, R. & Wu, G. 1999. On the Shape of the Probability Weighting Function. Cognitive Psychology, 38, 129-166.CrossrefGoogle Scholar

  • Hadar, J. and Russell, W.R., 1969. Rules for Ordering Uncertain Prospects, American Economic Review, 59, pp.25-34.Google Scholar

  • Hanoch, G. and Levy, H., 1969. The Efficiency Analysis of Choices Involving Risk, Review of Economic Studies, 36, pp.335-346.CrossrefGoogle Scholar

  • He, X.D. & Zhou, X.Y. 2013. Hope, Fear and Aspirations. Mathematical Finance, 26, 3-50.Google Scholar

  • Kahneman, D. & Tversky, A. 1979. Prospect Theory: An Analysis of Decision Under Risk. Econometrica 47, 263-292.CrossrefGoogle Scholar

  • Kataoka, S. 1963. A Stochastic Programming Model. Econometrica, 31, 181-196.CrossrefGoogle Scholar

  • Kolmogorov, A.N. 1933. Grundbegriffe der Wahrscheinlichkeitsrechnung. Springer, Berlin.CrossrefGoogle Scholar

  • Landes, W. 1978. An Economic Study of U.S. Aircraft Hijacking: 1961 to 1976. Journal of Law and Economics, 21, 1-31.Google Scholar

  • Levy, H., 1992. Stochastic Dominance and Expected Utility: Survey and Analysis, Management Science, 38, pp.555-593.Google Scholar

  • Loomes, G. & Sugden, R. 1982. Regret Theory: An Alternative Theory of Rational Choice Under Uncertainty. Economic Journal, 92, 805-824.CrossrefGoogle Scholar

  • Lopes, L.L. 1987. Between Hope and Fear: The Psychology of Risk. Advances in Experimental Social Psychology, 20, 255-295.CrossrefGoogle Scholar

  • Lopes, L.L. 1995. An Information Processing Perspective on Choice. In Decision Making From a Cognitive Perspective. Edited by Douglas Medin, Jerome Busemeyer & Reid Hastie, Academic Press, San Diego, California.Google Scholar

  • Lopes, L.L. 2013. Goals and the Organisation of Choice Under Risk. Working Paper, University of Iowa.Google Scholar

  • Lopes, L.L. & Oden, G.C. 1999. The Role of Aspiration Level in Risky Choice: A Comparison of Cumulative Prospect Theory and SP/A Theory. Journal of Mathematical Psychology, 43, 286-313.CrossrefGoogle Scholar

  • Machina, M.J. 1982. Expected Utility Analysis Without the Independence Axiom. Econometrica, 50, 277-323.CrossrefGoogle Scholar

  • Machina, M.J. 1987. Choice Under Uncertainty: Problems Solved and Unsolved. Journal of Economic Perspectives, 1, 121-154.Google Scholar

  • Markowitz, H.M. 1952. Portfolio Selection. Journal of Finance, 77-91.Google Scholar

  • Meyer, J., 1977a. Further Application of Stochastic Dominance to Mutual Fund Performance, Journal of Financial and Quantitative Analysis, 12, pp.235-242.CrossrefGoogle Scholar

  • Meyer, J., 1977b. Choice Among Distributions, Journal of Economic Theory, 14, pp.326-336.CrossrefGoogle Scholar

  • Neumann, J. von & Morgenstern, O. 1947. Theory of Games and Economic Behaviour, Princeton University Press, Princeton, NJ.Google Scholar

  • Phillips, P.J. 2009. Applying Modern Portfolio Theory to the Analysis of Terrorism: Computing the set of Attack Method Combinations from which the Rational Terrorist Group will Choose in Order to Maximise Injuries and Fatalities. Defence and Peach Economics, 20, 193-213.CrossrefGoogle Scholar

  • Phillips, P.J. 2013. In Pursuit of the Lone Wolf Terrorist: Investigative Economics and New Horizons for the Economic Analysis of Terrorism, Nova Science, New York, New York.Google Scholar

  • Phillips, P.J. 2016. The Economics of Terrorism. Taylor & Francis (Routledge), Abingdon, Oxon & New York, New York.Google Scholar

  • Phillips, P.J. & Pohl, G. 2014. Prospect Theory and Terrorist Choice. Journal of Applied Economics, 17, 139-160.CrossrefGoogle Scholar

  • Phillips, P.J. & Pohl, G. 2017. Terrorist Choice: A Stochastic Dominance and Prospect Theory Analysis. Defence and Peace Economics 28, 150-164.CrossrefGoogle Scholar

  • Pohl, G. 2015. Media and Terrorist Choice: A Risk-Reward Analysis. Journal of Applied Security Research, 10, 60-76.Google Scholar

  • Pohl, G. 2017. Terrorist Choice and the Media. PhD Dissertation, University of Southern Queensland, Unpublished. Google Scholar

  • Prelec, D. 1998. The Probability Weighting Function. Econometrica, 66, 497-527.Google Scholar

  • Quiggin, J. 1982. A Theory of Anticipated Utility. Journal of Economic Behaviour and Organisation, 3, 323-343.CrossrefGoogle Scholar

  • Rieger, M.O. 2010. SP/A and CPT: A Reconciliation of Two Behavioural Decision Theories. Economics Letters, 108, 327-329.Google Scholar

  • Rothschild, M. and Stiglitz, J.E., 1970. Increasing Risk: I. A Definition, Journal of Economic Theory, 2, pp.225-243.CrossrefGoogle Scholar

  • Rothschild, M. and Stiglitz, J.E., 1971. Increasing Risk: II. Its Economic Consequences, Journal of Economic Theory, 3, pp.66-84.CrossrefGoogle Scholar

  • Roy, A.D. 1952. Safety First and the Holding of Assets. Econometrica, 20, 431-449.CrossrefGoogle Scholar

  • Sandler, T., Tschirhart, J.T. & Cauley, J. 1983. A Theoretical Analysis of Transnational Terrorism. American Political Science Review, 77, 36-54.CrossrefGoogle Scholar

  • Schmeidler, D. 1989. Subjective Probability and Expected Utility Without Additivity. Econometrica, 57, 571-587.CrossrefGoogle Scholar

  • Shefrin, H. & Statman, M. 2000. Behavioural Portfolio Theory. Journal of Financial and Quantitative Analysis, 35, 127-151.Google Scholar

  • Starmer, C. 2000. Developments in Non-Expected Utility Theory: The Hunt for a Descriptive Theory of Choice Under Risk. Journal of Economic Literature, 38, 332-382.CrossrefGoogle Scholar

  • Telser, L. 1956. Safety First and Hedging. Review of Economic Studies, 23, 1-16.CrossrefGoogle Scholar

  • Tversky, A. & Kahneman, D. 1992. Advances in Prospect Theory: Cumulative Representation of Uncertainty. Journal of Risk and Uncertainty, 5, 297-323.CrossrefGoogle Scholar

  • Wu, G. & Gonzalez, R. 1996. Curvature of the Probability Weighting Function. Management Science, 42, 1676-1690.CrossrefGoogle Scholar

  • Yaari, M.E. 1987. The Dual Theory of Choice Under Risk. Econometrica, 55, 95-115.Google Scholar

About the article

Received: 2016-12-19

Accepted: 2018-01-19

Published Online: 2018-02-07

Published in Print: 2018-02-01

Citation Information: Open Economics, Volume 1, Issue 1, Pages 71–85, ISSN (Online) 2451-3458, DOI: https://doi.org/10.1515/openec-2018-0001.

Export Citation

© 2018 Peter J. Phillips and Gabriela Pohl, published by De Gruyter Open. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License. BY-NC-ND 4.0

Comments (0)

Please log in or register to comment.
Log in