Worth your time.

Thomas C. Schelling held his Prize Lecture December 8, 2005, at Beijersalen, The Royal Swedish Academy of Sciences, Stockholm. He was presented by Professor Jörgen Weibull, Member of the Prize Committee for Economic Sciences.

Video and full text (in PDF) are available. The lecture was also published in PNAS and is freely accessible (in HTML, PDF) there.

An excerpt:

They will discover—I hope they will discover—over weeks of arguing, that the most effective use of the bomb, from a terrorist perspective, will be for influence. Possessing a nuclear device, if they can demonstrate possession—and I believe they can, if they have it, without detonating it—will give them something of the status of a nation. Threatening to use it against military targets, and keeping it intact if the threat is successful, may appeal to them more than expending it in a destructive act. Even terrorists may consider destroying large numbers of people and structures less satisfying than keeping a major nation at bay.