Terrorism is designed to change minds by destroying bodies; it is a form of costly signaling. Terrorists employ five primary strategies of costly signaling: attrition, intimidation, provocation, spoiling, and outbidding. The main targets of persuasion are the enemy and the population that the terrorists hope to represent or control. Terrorists wish to signal that they have the strength and will to impose costs on those who oppose them, and that the enemy and moderate groups on the terrorists' side cannot be trusted and should not be supported. Each strategy works well under certain conditions and poorly under others. State responses to one strategy may be inappropriate for other strategies. In some cases, however, terrorists are pursuing a combination of strategies, and the response must also work well against this combination.

Why are extremists able to sabotage peace processes in some cases but not others? And under what conditions will the public respond to such provocation and return to unpopular wars? We seek to show that extremist violence is not indiscriminate or irrational as many people have assumed but quite strategic. We argue that extremist violence intentionally plays on the uncertainty that exists between the more moderate groups who are attempting to negotiate a peace agreement. Using a game-theoretic model of the interaction of extremist violence and mistrust, we identify the conditions under which extremists will succeed and fail. We find that extremists are most likely to succeed in derailing a peace process when the targeted side believes that opposition moderates are strong. At these times, the public perceives moderates as best able to control and suppress extremists within their own ranks. When moderates are viewed as weak and unable to crack down on extremists, terrorism is more likely to fail. We discuss this finding, as well as a number of additional implications of the model, in connection with the Israeli–Palestinian case.

Mediators are often thought to be more effective if they are unbiased or have no preferences over the issue in dispute. This article presents a game theoretic model of mediation drawing on the theory of "cheap talk" which highlights a contrary logic. Conflict arises in bargaining games because of uncertainty about the resolve of the parties. A mediator can reduce the likelihood of conflict by providing information on this score. For a mediator to be effective, however, the parties must believe that the mediator is telling the truth, especially if the mediator counsels one side to make a concession because their opponent has high resolve and will fight. An unbiased mediator who is simply interested in minimizing the probability of conflict will have a strong incentive to make such statements even if they are not true, hence the parties will not find the mediator credible. Only mediators who are effectively "on your side" will be believed if they counsel restraint.

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Mediators are often thought to be more effective if they are unbiased or have no preferences over the issue in dispute. This article presents a game theoretic model of mediation drawing on the theory of "cheap talk" which highlights a contrary logic. Conflict arises in bargaining games because of uncertainty about the resolve of the parties. A mediator can reduce the likelihood of conflict by providing information on this score. For a mediator to be effective, however, the parties must believe that the mediator is telling the truth, especially if the mediator counsels one side to make a concession because their opponent has high resolve and will fight. An unbiased mediator who is simply interested in minimizing the probability of conflict will have a strong incentive to make such statements even if they are not true, hence the parties will not find the mediator credible. Only mediators who are effectively "on your side" will be believed if they counsel restraint.