Preference modification vs. incentive manipulation as tools of terrorist recruitment: the role of culture

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Preference modification vs. incentive
manipulation as tools of terrorist recruitment
the role of culture

• Michael Munger, Departments of
• Political Science and Economics
• Duke University
• Friday, Sept 30, 2005

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Problem of Acting as Society

• Can a group of people who disagree come to a
  consensus?
• I wantyou wantwhat do we want? COLLECTIVE
  CHOICE PROBLEM
• Even if they do agree, how could they coordinate
  their actions? INFORMATION /
  TRANSACTIONS COST PROBLEM
• Even if they all know what to do, why would they
  do it? FREE RIDER
  / COLLECTIVE ACTION
  PROBLEM

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Information and Coordination

• The peculiar character of the problem of a
  rational economic order is determined precisely
  by the fact that the knowledge of the
  circumstances of which we must make use never
  exists in concentrated or integrated form but
  solely as the dispersed bits of incomplete and
  frequently contradictory knowledge which all the
  separate individuals possess. The economic
  problem of society is thus not merely a problem
  of how to allocate "given" resourcesif "given"
  is taken to mean given to a single mind which
  deliberately solves the problem set by these
  "data." It is rather a problem of how to secure
  the best use of resources known to any of the
  members of society, for ends whose relative
  importance only these individuals know. Or, to
  put it briefly, it is a problem of the
  utilization of knowledge which is not given to
  anyone in its totality. (F.A. Hayek, 1945, AER).

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Problem 2--Commitment Without Enforcement, Can
We Cooperate?

• Common Knowledge Basis of CooperationWhen I You
  Know That I Know that it is in your interest to
  cooperate
• Can we account for irrational acts? Suicide
  bombings, sacrifice of a life? Are the bombers
  duped, or confused?
• We tend to think the state is the only
  answer.but..

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An Example of Cultural Difference

• shibboleth--The word is often combined with the
  word cultural.
• Its general meaning is mean an unspoken but
  shared understanding of something that identifies
  insiders, and distinguishes outsiders because
  they do not share this understanding.

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Shibboleth

• Judges 12, 5-7, King James 21st Ed. Bible
• 5   And the Gileadites seized the passages of
  the Jordan before the Ephraimites and it was so,
  that when those Ephraimites who had escaped said,
  "Let me go over," that the men of Gilead said
  unto him, "Art thou an Ephraimite?" If he said,
  "Nay,"
• 6   then said they unto him, "Say now
  Shibboleth." And he said "Sibboleth," for he
  could not frame to pronounce it right. Then they
  took him and slew him at the passages of the
  Jordan and there fell at that time of the
  Ephraimites forty and two thousand.

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My Definition of Culture

• Culture The set of inherited beliefs,
  attitudes, and moral strictures that a people use
  to distinguish outsiders, to understand
  themselves and to communicate with each other.

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Culture Is Inherited

• I have put quotations around the word inherited
  above, not because I am quoting anyone, but
  because the sense of the word is strained.
• Hair texture, eye color, general buildthose
  sorts of things are inherited. They are
  hard-wired into the genetic structure of humans,
  and children are directly and entirely the
  product of their parents.
• Culture is obviously not inherited like this. We
  teach it to our children, or they learn it by
  tacit and perhaps unconscious exposure over time.
  
• But it makes sense to think of culture as an
  inheritance, or legacy from the past.

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Origins Two Concepts

• Spontaneous Order
• Intelligent Design
• Does order imply design? Strange disconnectMany
  people who believe fervently in evolution in
  biology insist on the need for design and control
  in social and economic settings.

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The Questions that interest me

• Are preferences tastes, truly primitive
  (chocolate v. vanilla), or are they culturally
  conditioned or even instrumenal?
• Are moral beliefs important? Are such beliefs
  best treated as preferences or constraints?
• Core values relatively fixed, strongly held,
  primitives in terms of preference. Policy
  beliefs not held instrumentally, but as ends in
  themselves. Not irrational to sacrifice for
  beliefs

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The Questions that interest me

• Are ideologies, or shared belief systems about
  right and wrong, the key to understanding moral
  beliefs? In the U.S., lots of research to say no.
  But Islam, or Maoism, may have implications for
  guerrilla movements
• Are ideologies a kind of spontaneous order, not
  explicitly designed but regular and consistent
  across people and across time? Ideas--like
  viruses? Reproduce, gain resources, but kill
  their host.

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Emergence of Culture David Hume has Lunch at
Café Hayek (where orders emerge)

• Three claims about culture
• Order requires only regularity and consistency.
  Human beings choose actions based on moral
  conceptions, but also incentives and calculated
  gains that accrue to one action rather than
  another.
• Purposive Action I am going to adopt the
  convention that humans act purposively. (Didnt
  say rationally)
• People choose actions that they believe (rightly
  or wrongly) will lead to a goal that they
  consider (rightly or wrongly) desirable. These
  conceptions of right and wrong may be Humean
  conventions, not transcendent principles.

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Emergence of Culture David Hume has Lunch at
Café Hayek (where orders emerge)

1. Surprising thing is that order can emerge, even
   from disparate and uncoordinated application of
   social convention.
2. Survival value of practices, or fashion, may be
   conscious reason for adoption. But it is a
   predictable, and measurable, consequence.

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Order vs. Design Which is Culture?

• CoyoteEvolution
• Dachshund / ChihuahuaSurvival
• DandelionEvolution
• RoseSurvival
• Wild TurkeysEvolution
• Domesticated TurkeysSurvival

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Choices Emerge.Do Preferences?

• Is there some evolutionary process that governs
  preferences?
• Are human political beliefs getting better over
  time?
• The key difference is the absence of any feedback
  mechanism by which the merits of the emergent
  order might be judged, or subjected to
  modification.

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• Douglass North makes this point quite forcefully
  Necessary conditions for what economists think
  of as efficiency almost never exist in political
  realm
• Efficient markets are created in the real world
  when competition is strong enough via arbitrage
  and efficient information feedback to approximate
  the Coase zero transaction cost conditions and
  the parties can realize the gains from trade
  inherent in the neo-classical argument.
• But the informational and institutional
  requirements necessary to achieve such efficient
  markets are stringent. Players must not only have
  objectives but know the correct way to achieve
  them. But how do the players know the correct way
  to achieve their objectives? The instrumental
  rationality answer is that even though the actors
  may initially have diverse and erroneous models,
  the informational feedback process and
  arbitraging actors will correct initially
  incorrect models, punish deviant behavior and
  lead surviving players to correct models.
  (North, 1993).

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Will Culture Disappear?

• Ronald Heiner (1983) argues that as human
  interaction becomes more complex and uncertain,
  successful social institutions must reduce the
  information needed to achieve cooperation among
  individuals.
• A persons overall behavior may actually be
  improved by restricting flexibility to use
  information or to chose particular actions (p.
  564).
• Mom and Pop hardware store vs. Walmart
• Farmers Market vs. Piggly Wiggly

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The End of History

• What is the cheapest way of achieving
  cooperation? Formal rules and external
  enforcement, or culture and shame/guilt
  enforcement? Heiner (1983)
• In general, further evolution toward social
  interdependence will require institutions that
  permit agents to know about successively smaller
  fractions of the larger social environment. That
  is, institutions must evolve which enable each
  agent in the society to know less and less about
  the behavior of other agents and about the
  complex interdependencies generated by their
  interaction (580 emphasis in original).
• In WalMart world, ideologies would disappear.
  Western, market-based societies with weak parties
  and decentralized democratic institutionsthe end
  of history?

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Institutional Design Information.and Commitment

• Institutions are the humanly devised rules of the
  game that shape and direct human interactions.
• Institutions reduce uncertainty by shrinking the
  choice set of all of the players. If the rules
  are not formalized, the players may spend too
  much time arguing over the rules, and less time
  competing in productive activities. The actual
  choice of institutions, however, is hard, since
  there are countless ways of restricting bad
  choices. What makes some institutions better
  than others?
• The Preference Store Metapreference

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Step back for a moment.The Fundamental Human
Problem(according to Munger)

• How can we construct or preserve institutions
  that make individual self-interest not
  inconsistent with the common good?

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Two Approaches

• Madisonian
• Ambition must be made to counteract ambition
• Rousseauvian
• Transform the self, solve the problem of amour
  propre. Inscribe the law on the hearts of men.
  Some preferences are better than others.

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The Problem.

• The nature of exchange gains from trade. Both
  are better off.
• But only if the exchange takes place
  transactions costs are the ex ante costs of
  negotiating and measuring, and the ex post costs
  of enforcing. Transactions costs can easily
  overwhelm the potential gains from exchange.
• Institutions and cultural beliefs closely
  related to "common knowledge" problem in game
  theory. Shared meanings, iconography, language,
  symbols. Not just knowledge in the Hayekian
  sense, but also commitment
• But also may entirely block progress, lock in
  institutions that are not Pareto optimal.

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Origins of culture

• The literature contains two strikingly different
  accounts of the origins of culture, based on two
  very different conceptions of its function.
• One account is based on transactions cost and
  commitment, while the other rests on the problem
  of excludability and club goods.
• The two accounts are not mutually exclusive, but
  they do have strikingly different implications
  for our understanding of culture.

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I. Commitment Device Real Piety

• Kreps (1990)
• Hierarchy
• Uncertainty
• Requires an organizing principle as a commitment
  device.

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The Trust Game
Honor Trust
A 20 B 20
Total 40
Trust B
A ?10 B 30
Total 20
Do Not Honor Trust
A
B
Do Not Trust B
A 0 B 0
Total 0
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Hierarchy and Strategic Uncertainty

• It is Bs behavior that is in question somehow B
  must persuade A that there is at least a high
  probability that B will honor As trust if A
  offers it. And there are real gains to be made
  here, so there are significant pressures at work
  to overcome this commitment problem. There are
  two apparently different but mathematically
  indistinguishable ways of solving the problem
• B could post a bond, or submit to some kind of
  binding third party enforcement that would punish
  him if he violates trust, or
• B could persuade A that cares so much for A, or
  that B cares so much for his own honor, that he
  will not violate the trust, because it would not
  be in his interest to do so, given Bs self
  interest properly understood.
• Similar in terms of analytics, but a world of
  difference in terms of practical implications,
  and beliefs.

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Hierarchy and Strategic Uncertainty

• Outside enforcement Hobbes covenants, without
  the sword, are but words
• Beliefs Rousseau inscribe the law on the
  hearts of men
• It is common to dismiss this difference, but in
  fact the distinction may be the very heart of the
  matter for the society.
• Dead weight loss to society has two parts (1)
  The size of the transactions cost sector of the
  society, and (2) Other exchanges precluded by an
  inability to reduce transactions costs to the
  point where those otherwise profitable
  transactions can take place
• This loss is a direct function of the societys
  set of moral beliefs that condition interactions.
  It will surprise no one at this point that I
  want to call this whole set of moral beliefs and
  conditioning factors for economic and social
  exchange by the vague name I mentioned earlier
  culture.

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II. Club Goods Good Works

• A standard set-up for the club goods approach is
  Bermans (2003)
• Imagine a community for which neither government
  nor markets function well. Local public goods
  usually provided by government such as public
  safety, law and order and welfare services are
  poorly provided or absent, while neither public
  nor private sectors efficiently deliver
  education, health services, or insurance. It
  would not be surprising for individuals in such a
  place to band together into communities which
  provide public safety, education, welfare
  services, and other local public goods through
  mutual insurance. (Berman, 2003, p. 2)

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Game 1 Prisoners Dilemma
Cooperate Defect
Cooperate (2,2) (4,1)
Defect (1,4) (3,3)
ORDINAL PREFERENCES 1 is good, 4 is bad
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Game 1? Prisoners Dilemma with External
Enforcement Defectors are Tortured their
Families Killed
Cooperate Defect
Cooperate (1,1) (2,4)
Defect (4,2) (3,3)
ORDINAL PREFERENCES 1 is good, 4 is bad
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Game 1? ? Prisoners Dilemma with External
Enforcement Defectors Feel Really Bad
Cooperate Defect
Cooperate (1,1) (2,4)
Defect (4,2) (3,3)
ORDINAL PREFERENCES 1 is good, 4 is bad
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Game 2 Culture War
Cooperate Defect
Cooperate (3,3) (4,1)
Defect (1,4) (2,2)
ORDINAL PREFERENCES 1 is good, 4 is bad
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Game 3 U.S. in Iraq1992No Equilibrium.
Anti-Saddam Insurgency? U.S. ? Cooperate Defect
Cooperate (2,1) (3,3)
Defect (1,4) (4,2)
ORDINAL PREFERENCES 1 is good, 4 is bad
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Game 3 U.S. in Iraq2005Side Payments.Be
Rational
Anti-U.S. (Sunni) Insurgency? U.S. ? Cooperate Defect
Cooperate (1,3) (2,1)
Defect (4,4) (3,2)
ORDINAL PREFERENCES 1 is good, 4 is bad
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If Club Goods.

• If participation in terrorist organizations is
  primarily an in-kind payment for access to club
  goods, then policies that reduce the marginal
  value of such club goods will be most effective.
  
• A concerted effort to break up social networks,
  in cases where groups with terrorist ties (such
  as Hamas, or IRA) also provide local public goods
  such as schools, police services, etc., and
  replace those organizations with publicly
  provided services, would have an immediate impact
  out of all proportion to the cost.
• Though the dividing line between police
  services and protection racket may be blurred,
  it is clearly true that the IRA (in Northern
  Ireland) and Hamas (in the Palestinian
  territories or in other parts of the Middle East)
  provided services valued by many local citizens.

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If Club Goods.

• Furthermore, if the problem is an
  incentives-based choice, it becomes clearer why
  medieval punishments have often been employed by
  occupiers fighting resistance groups using terror
  tactics.
• The rack, drawing-and-quartering, or other public
  displays of savage retribution reduce the value
  of access to local public goods as a matter of
  simple cost-and-benefit calculations.
• While this observation does not justify the use
  of such tactics, it does explain why they have
  been so commonly observed throughout history.

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If Preferences.

• If, on the other hand, a preference for
  cooperation can be inculcated or selectively
  recruited, then such tactics are likely to
  backfire.
• If the primary good is psychological solidarity
  with an identifiable group, then public abuse or
  torture may only harden the resolve of those
  committed to cooperation with terror groups.
• To the extent that abuse of some populations
  solidify in-group vs. out-group psychological
  identifications, attempts to use incentives can
  precipitate the culture war setting described
  earlier in this paper.
• In that setting, publicly uncooperative behavior
  becomes valued as an end in itself, and even
  apparently Pareto-superior compromises on
  territory may be ruled out. If the preferences
  are primitives, not possible to compensate or buy
  out terrorists with alternative incentives.

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A movie Positive Feedback.