Middle East: How should Israel respond to the current succession of terror attacks?

The terrorists who are essentially autocrats, are scared by by the wave of democratization in the Middle East and step up their attacks to scare eventual dissent among their ranks into submission. The worst Israel can do is play in their hands by m reprisals. If Israel knows the culprits by any means go after them, but do not kill a bunch of civilians in the process which will only prove the terrorist right even if we all know they are not. Settlements are illegal and detrimental to Israel democracy. Any right wing government will readily install settlements, defend them and count on the vote of the settlers to the detriment of honest law abiding Israelis. This is not meant to offend settlers. Especially if they come from Russia perhaps living in a hostile environment under threat of terrorism is more agreeable than going back. In any case settlements exploit defenseless people.