The proposed anti-terrorist policy has two important advantages over a coercive policy. The whole interaction between terrorists and the government transforms into a positive sum game and the strategy undermines the cohesiveness of the terrorist organisation. Surveying empirical results on the effects of terrorism on the economy and society, Bruno Frey demonstrates the strength of an economic approach to terrorism, which will be of great interest to social and also political scientists, public policy scholars, international relations experts and researchers, and above all, economists. The alternatives to deterrence illustrated in the book are advantageous for the general public and politicians, and the actuality that a positive policy is better than a coercive policy will be of great appeal to educators.

Emphasising a positive approach to dealing with terrorism (the carrot), this book provides a critique of deterrence policy (the stick) which can be ineffective and even counterproductive, and proposes three alternative and effective anti-terrorist policies:

• Decentralisation reduces vulnerability to terrorist attacks. A system with many different centres is more stable due to its diversity, enabling one part to substitute for another;
• Positive incentives can be offered to actual and prospective terrorists not to engage in violent acts. Incentives include: Reintegrating terrorists into society, welcoming repentants and offering them valued opportunities;
• Diverting attention by naming several terrorist groups potentially responsible for a particular terrorist act. The government thus supplies more information than the terrorist responsible would wish.

The proposed anti-terrorist policy has two important advantages over a coercive policy: The whole interaction between terrorists and the government transforms into a positive sum game and the strategy undermines the cohesiveness of the terrorist organisation.