Abstract: I develop a model in which a terrorist organization delegates tasks to recruits. The organization faces a classic principal-agent problem: it wants to assign sensitive tasks exclusively to the most extreme (and therefore reliable) recruits but cannot perfectly screen for commitment to the cause. In equilibrium, the organization interprets the desirability of a recruit’s opportunities in the civilian sector as a credible signal. When the recruit has attractive options available, the organization infers his commitment and gives him a sensitive task; when it is low, the organization conservatively assigns him a non-sensitive task. I then extend the model to allow for an external actor to endogenously improve economic conditions among the civilian population. Despite raising the opportunity cost of terrorism, such subsidies can increase the intensity of violence because they help the organization screen out uncommitted types.
Revise and resubmit, Quarterly Journal of Political Science