The end of Al-qa´ida: rationality, survivability and risk aversion

Phillips, Peter J. (2013) The end of Al-qa´ida: rationality, survivability and risk aversion. International Journal of Economic Sciences, 2 (1). pp. 61-81. ISSN 1804-9796

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Along with such factors as declining support, the dismantling of the leadership group and transition into legitimate political engagement there is another factor that is relevant to the decline and fall of terrorist groups. This is the group’s risk aversion. This aspect of the terrorist group’s profile, which shapes the way in which it makes decisions under conditions of risk, relates crucially to its evolutionary stability and longevity. In fact, it may play a more important role than ‘rationality’. Terrorist groups must compete for a share of the available ‘political influence’ and violent groups do so by competing for a share of ‘inflicted fatalities’. Differential rates of accumulation determine the differential significance of some individuals and groups over others. Terrorist groups with logarithmic utility functions will exhibit longevity because logarithmic utility maximisation naturally equates with the maximisation of the growth rate of the share of inflicted fatalities and political influence. Terrorist groups with non-logarithmic utility functions will see their significance decline. The study of risk aversion has implications for the prediction from microeconomic theory of which terrorist groups will survive in the long run. The analysis presented herein computes a value of 0.56 for Al-Qa`ida’s relative risk aversion coefficient. This value is too low to be consistent with logarithmic utility.

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Item Type: Article (Commonwealth Reporting Category C)
Refereed: Yes
Item Status: Live Archive
Additional Information: No evidence of copyright restric tions preventing deposit. Journal freely avaialable online.
Faculty/School / Institute/Centre: Historic - Faculty of Business and Law - School of Accounting, Economics and Finance
Date Deposited: 27 May 2013 02:36
Last Modified: 03 Jul 2017 03:27
Uncontrolled Keywords: terrorism, political influence, fatalities, Al-Qa`ida, risk aversion, utility maximisation, logarithmic utility, evolutionary stability
Fields of Research : 14 Economics > 1402 Applied Economics > 140299 Applied Economics not elsewhere classified
Socio-Economic Objective: A Defence > 81 Defence > 8101 Defence > 810107 National Security

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