This chapter begins with a discussion of how the covert nature of terrorism inevitably creates opportunities for operatives to expropriate organizational resources for their own purposes, leading to the security-efficiency tradeoff. It then turns to an analysis of the security-control tradeoff, modeling the tradeoff as arising from an unusual agency problem in which principals are better informed than their agents about which actions will best serve the political goal. The chapter also looks at how this tradeoff plays out, since communicating with these agents creates security risks and sanctioning them for misbehaving is costly. The game-theoretic analysis provides rich intuition for what one should expect to see in terms of differences between organizations that vary in distinct ways on the key variables of discrimination, uncertainty, preference divergence, and security.
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