You may well be right about why he chases, however often fear behaviour, due to release of adrenalin etc can look like the dog is enjoying it; also dogs can become addicted to what was a fear based behaviour especially if there are rewards in it for the dog, so it can all get rather confusing!

I tend to feel that ignoring in this kind of situation really doesn't work anyway, not if in any way the behaviour is fearful or self rewarding.
I would go for the desensitisation and counterconditioning but, you do need as Lilith suggested to work only within the dog's comfort zone - if the dog gets to barking, lunging etc you have gone too far and if you are only a short way into the programme, all your previous work could have been undone.
In classical conditioning, which is what I believe you have tried (desensisiting etc) you don't distract or reward, as such; you use the toy/tasty food as something which is "associated" with the bad thing. It's the deep emotions you are working on. Ideally, you give the pleasant thing as the bad thing appears, and withdraw the pleasant thing as the bad thing disappears. YOu do need to be far enough away so that your dog is slightly "interested" (ie looking, has noticed bad thing, tail showing this and body language but no more reaction than this).
I hope that's of some help, it is'n't easy :)
Ideally you could drive him to walks and only do specific careful set ups for training.
Other way is, you could try enlistig the help of a reputable behaviourist who may have other ideas, and who may work with a vet to suggest drugs to open a window of opportunity (the dog is not on drugs forever) however understandably many owners are not eager to go down this route, I'm mentioning it is all ;) and this has to be done only with a behavioural programme, the dog should never jsut be on drugs period.
I would prefer to avoid drugs myself :)
Another view is, have you thought of "working" him to guide any possible needs in that direction? would he enjoy learning a dog sport? It may help.
Lindsay
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