This article presents an eclectic review of the analytical study of terrorism that views all agents as rational decisionmakers. This analytical literature began in earnest with the seminal study of US skyjackings by William Landes in 1978. After 11 September 2001, the analytical literature on terrorism grew rapidly. Based on policy relevance, my survey article identifies five key areas of intense research interests. These include analyses of terrorist attack trends, the economic consequences of terrorism, the study of counterterrorism effectiveness, the causes of terrorism, and the relationship of terrorism and liberal democracies. New developments in the field focused on distinguishing key differences between domestic and transnational terrorism. Additionally, recent game-theoretic advances permitted more active agents and stages to the games. Other major developments involved the study of networked terrorists and the role of counterterrorism foreign aid. Fruitful future directions include using advanced econometric methods to discern the true impact of terrorism on growth, applying spatial econometrics to the study of terrorism, ascertaining the determinants of terrorist groups' longevity, and learning how to foster international counterterrorism cooperation.
