Tiberiu Dragu. 2010. Is There a Trade-off between Security and Liberty? Executive Bias, Privacy Protections, and Terrorism Prevention

Tiberiu Dragu. 2011. "Is There a Trade-off between Security and Liberty? Executive Bias, Privacy Protections, and Terrorism Prevention." American Political Science Review 105(1): 64-78.

Model:

• Privacy is given as exogenous.
• Terrorists maximize their utility with respect to terrorist activity a.
• Anti-terrorist agencies maximize their utility with respect to effort against terrorism e.
• The terrorist activity levels and the effort against terrorism jointly determine the probability of a successful terrorist attack.
• Solve the problem the way you would a Cournot problem.

Assumptions:

• Privacy shifts the best response functions. 
• Increasing privacy decreases costs of attack for the terrorist. The marginal cost also decreases in privacy.
• Increasing privacy increases costs of attack for the anti-terrorist agency. The marginal cost also increases in privacy.
• The terrorist organizations costs increase in a and are convex.
• The anti-terrorist organization costs increase in e and are convex. 

Results:

• The probability of a terrorist attack does not necessarily decrease when privacy decreases. 
• The expected utility of the anti-terrorist agency always increases when privacy decreases, even if the probability of terrorist attack increases when privacy decreases.