This paper investigates the interaction between terrorist attacks and electoral
outcomes in Israel. We analyze a dynamic model of reputation that captures the
salient characteristics of this con ict. The equilibrium of the theoretical model
generates two precise empirical predictions on the interaction between terrorism and
electoral outcomes. First, we expect that the relative support for the rightist party
increases after periods with high levels of terrorism and decreases after relatively
calm periods. Second, the expected level of terrorism is higher during the leftist
party s tenure in o¢ ce compared to the one expected during the rightist party s
term in o¢ ce. We test the hypotheses above using a newly culled data set on
terrorist attacks in Israel and the occupied territories between 1990 and 2003. The
rst hypothesis is strongly supported by the available data obtained from public
opinion polls on the Israeli electorate s intent of voting. We use event study methods
and likelihood ratio tests to evaluate the second hypothesis, as electoral outcomes
are endogenous to the level of terrorist attacks. The results support our theoretical
prediction for three of the four Israeli governments in the studied time period.
Accordingly, we observe an increase in terrorist attacks during leftist governments
and a decrease in terrorist attacks during rightist governments.