Terrorists are hampered by biases as much as the rest of us. In a Wired commentary "The Evolutionary Brain Glitch That Makes Terrorism Fail" Bruce Schneier discusses the interesting findings of Max Abrams in his paper Why Terrorism Does Not Work (International Security, Vol. 31, No. 2 (Fall 2006), pp. 42–78).

Basically, terrorists run into trouble because people use correspondent inference theory to infer the intentions of others: the results of their actions are assumed to be concordant with their intentions. If a person sweeps the floor we assume he wants it clean (but he could just be working off excess energy). If somebody hits somebody else, we assume the intention was to harm (but it could just be a game). Similarly, people infer that the horrific deaths of innocents is the primary motivation of a terrorist – which likely leads to a misunderstanding of the real goals of the terrorist.

This is bad news for terrorism as an effective coercive means to political or social ends. Although the terrorist can state his demands and goals, people will tend to assume that he is just a sadist rationalising. Possibly a dangerous sadist one has to occasionally acquiesce to, but the goals are not seen as essential to him. His "real" goals are assumed to be the destruction of society, and this makes accepting demands less favorable. Abrams finds empirical support for this in that terrorists are much more likely to succeed with their demands if they focus their attacks on military goals rather than civilian ones, and if they have minimalist goals (evicting a foreign power, winning control of a piece of territory). Attacking civilians or wanting to change the world makes people assume the intention is something else.

This analysis assumes bias among the non-terrorists making them unwilling to play along, but clearly there are plenty of biases among the terrorists too. The correspondence makes them impute evil intentions to governments that behave clumsily or violently. The emotional salience of terror probably introduces a lot of availability bias, impact bias makes terrorists overestimate the emotional effect of their actions, groupthink is likely pretty big within terrorist grooming communities and so on.

It seems that one could probably analyse terrorism in terms of cognitive biases quite fruitfully. Whether that will lead to ways of reducing terrorism is another matter. Maybe unbiased terrorists will simply see that the Bayesian thing to do is simply to go home since terror doesn’t work efficiently – or they would start making non-hyperbolic long-term plans for surgical strikes that simply cannot be misunderstood. Conversely, maybe terrorists could be incited to bias themselves into inefficiency, but highly biased people can occasionally be dangerous. Maybe the real aim should be an unbiased anti-terror strategy – but as long as politicians and public are biased they will likely see the unbiased strategy as wrong.