Hiding in Plain Sight – Using Signals to Detect Terrorists

In this paper, we study the interaction between a governmental security agency, such as the Transportation Security Agency, or the Immigration and Naturalization Service, and a terrorist organization, such as Al Qaeda. The governmental agency wants to stop the terrorists, but first must infer whether a visa applicant or an airline passenger is a terrorist or not, on the basis of some observable signal. On the other hand, the terrorist organization’s objective is to get past security to commit murder and mayhem. We derive the equilibrium strategy under these circumstances. With a signaling model we evaluate specific anti-terrorist policies such as the creation of the new Homeland Security Agency and increased airport security screening.