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The real puzzle of blackmail: An informational approach

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  • Miceli, Thomas J.

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 are not 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.

Suggested Citation

  • Miceli, Thomas J., 2011. "The real puzzle of blackmail: An informational approach," Information Economics and Policy, Elsevier, vol. 23(2), pages 182-188, June.
    • Handle: RePEc:eee:iepoli:v:23:y:2011:i:2:p:182-188
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    1. Johannes Hörner & Andrzej Skrzypacz, 2016. "Selling Information," Journal of Political Economy, University of Chicago Press, vol. 124(6), pages 1515-1562.
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    9. Steven Shavell, 1994. "Acquisition and Disclosure of Information Prior to Sale," RAND Journal of Economics, The RAND Corporation, vol. 25(1), pages 20-36, Spring.
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    Cited by:

    1. Thomas J. Miceli, 2020. "Trading in Information: On the Unlikely Correspondence Between Patents and Blackmail Law," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(4), pages 637-650, June.
    2. Thomas J. Miceli, 2021. "Reconciling blackmail and nondisclosure agreements: An economic approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 268-274, March.

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    More about this item

    Keywords

    Asymmetric information Blackmail Adverse selection;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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