Economists for Peace and Security

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Deadly contests: An economic note on al Qaeda's reward system
CARUSO, Raul and Andrea LOCATELLI

Vol 3, No 2 - Symposium: Palestine - an economy in conflict, July 2008

The article applies insights of contest theory to al Qaeda's recruitment process. Al Qaeda can be considered as a contest organizer rewarding an indivisible prize, namely, official membership and economic rewards, to candidate extremist groups. Would-be terrorists must then compete with each other to prove their commitment and ability. Candidate terrorist groups compete by maximizing their efforts to win the prize, i.e. maximizing the number of casualties. Eventually, al Qaeda reaps the benefits of the most successful attacks in the form of a huge return in terms of image, while paying a limited price. If correct, this model carries at least two important implications for counterterrorist policy. First, inasmuch as al Qaeda's main incentive to prompt competition is through spreading common knowledge about the existence of the prize, action should be undertaken to falsify and confuse the kind of information that aspirant terrorists receive. Second, because al Qaeda's reward is as much ideological as economic, efforts should be dedicated to track down and halt financial flows before they are used to reward the applicants

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