Economist blogger "M.S." comments on the Hamas attack in the West Bank a few days ago:
[S]omething happened yesterday that, to my recollection, has never happened before, at least not with such clarity: in the midst of direct negotiations between Israel and the Palestinian Authority, a deadly attack took place, and rather than call off the talks, both sides resolved to keep going. In fact, they both explicitly characterised the attack as an attempt to sabotage the talks, and insisted they wouldn't be sidetracked. ...
Throughout the 1980s, Israel pursued a self-destructive agenda of refusing to negotiate with Palestinians under the slogan "we will not negotiate with terrorists". Yesterday, Binyamin Netanyahu declared he would not allow terrorists to stop him from negotiating. It may not be enough to get a final status agreement. But it's an indication that he's serious.
Are M.S.'s impressions correct? Mostly. From a classic 2002 study by Andrew Kydd and Barbara Walter on Israeli-Palestinian peace negotiations (I couldn't find an ungated version):
This story illustrates two intriguing patterns in extremist violence. First, most extremist violence is not indiscriminate or irrational as many people have assumed. In fact, terrorist attacks in Northern Ireland and the Middle East over the last ten years show a clear and recurring pattern, where violence is timed to coincide with major events in a peace process. ... Second, extremists are surprisingly successful in bringing down peace processes if they so desire. Between 1988 and 1998, fourteen peace agreements were signed between combatants engaged in civil war. If terrorist violence occurred during negotiations, just one in four treaties (25 percent) were put into effect. However, if terrorist violence did not occur, six out of ten treaties (60 percent) were implemented. Although extremists are known to espouse radical views and to represent only a small minority of citizens, they are surprisingly successful in their aims.
Applying the Kydd/Walter story to the present situation would go like this: Hamas attacked Israelis on the eve of the negotiations in order to persuade moderate Israelis that moderate Palestinians would not be able to uphold any agreement made to control extremists. If Israelis cannot trust Palestinians to control extremists, then an agreement is worthless. If an agreement is worthless, then why make concessions to reach it? Hence, the attack leads to a breakdown in negotiations by causing doubt that an agreement can be enforced.
So why hasn't it worked this time? Well, it could be that neither side had any expectations that this meeting would produce a meaningful agreement in the first place. Perhaps because Israelis already doubted whether Abbas (a member of Fatah) could control Hamas extremists, so this attack does nothing to shift expectations. Both are more likely than Israelis suddenly choosing to trust Abbas in spite of the attack, and either is cause for skepticism that these meetings will lead to meaningful agreement. So while it is true that it is somewhat rare for negotiations to continue after an attack, it is not clear that M.S. is correct to view the continuance of negotiations as a positive sign. It's more likely that it's not.