The Real Puzzle of Blackmail: An Informational Approach

Thomas Miceli

No 2010-08, Working papers from University of Connecticut, Department of Economics

Abstract: The "puzzle" of blackmail is that threats to reveal private information that would be harmful to someone in exchange for money are illegal, but revelation is not. The resolution is that concealment of information about product quality impedes the efficient operation of markets, whereas revelation promotes it. The real puzzle is why possessors aren't naturally inclined to sell to uninformed parties, who value the information more than would-be blackmail victims. The answer has to do with the public good qualities of information, which create an appropriability problem in transactions with uninformed parties. The paper also discusses incentives to acquire compromising information.

Keywords: Asymmetric information; blackmail; adverse selection (search for similar items in EconPapers)
JEL-codes: D82 K42 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2010-04
New Economics Papers: this item is included in nep-cta and nep-hpe
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Journal Article: The real puzzle of blackmail: An informational approach (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:uct:uconnp:2010-08

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