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Rwanda’s involvement in Eastern DRC: A criminal real options approach

Author

Listed:
  • Cassimon, Danny
  • Engelen, Peter-Jan
  • Reyntjens, Filip

Abstract

This paper applies an alternative model to analyze criminal behaviour by countries based on real option models. Criminal options incorporate a richer framework than traditional cost-benefit models and allow examining the optimal timing of a crime as criminals have the possibility but not the obligation to commit a crime in the near future. From the model, we show how criminal states can actively manage their criminal options. More importantly, we show how the international community can optimally intervene pro-actively, by reducing the incentives for criminal states to execute their criminal options. These novel insights are then applied to two episodes of criminal behaviour by Rwanda in the Democratic Republic of Congo (DRC): the massive killing of Hutu refugees by the Rwanda Patriotic Army (RPA) in late 1996-early 1997 and the illegal exploitation of Congolese resources from August 1998 onwards. This article describes and assesses these activities from this real option perspective.

Suggested Citation

  • Cassimon, Danny & Engelen, Peter-Jan & Reyntjens, Filip, 2013. "Rwanda’s involvement in Eastern DRC: A criminal real options approach," MPRA Paper 46993, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:46993
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    File URL: https://mpra.ub.uni-muenchen.de/46993/1/MPRA_paper_46993.pdf
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    References listed on IDEAS

    as
    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    2. Peter-Jan Engelen, 2004. "Criminal Behavior: A Real Option Approach With an Application to Restricting Illegal Insider Trading," European Journal of Law and Economics, Springer, vol. 17(3), pages 329-352, May.
    3. repec:bla:jfinan:v:43:y:1988:i:5:p:1235-56 is not listed on IDEAS
    4. Raul Guerrero, 2007. "The Case for Real Options Made Simple," Journal of Applied Corporate Finance, Morgan Stanley, vol. 19(2), pages 38-49, March.
    5. Cassimon, Danny & Engelen, Peter-Jan & Yordanov, Vilimir, 2011. "Compound Real Option Valuation with Phase-Specific Volatility: a Multi-phase Mobile Payments Case Study," MPRA Paper 46053, University Library of Munich, Germany.
    6. International Monetary Fund, 2004. "Rwanda: Selected Issues and Statistical Appendix," IMF Staff Country Reports 2004/383, International Monetary Fund.
    7. Ingrid Samset, 2002. "Conflict of interests or interests in conflict? diamonds & war in the DRC," Review of African Political Economy, Taylor & Francis Journals, vol. 29(93-94), pages 463-480, September.
    8. Cassimon, D. & De Backer, M. & Engelen, P.J. & Van Wouwe, M. & Yordanov, V., 2011. "Incorporating technical risk in compound real option models to value a pharmaceutical R&D licensing opportunity," Research Policy, Elsevier, vol. 40(9), pages 1200-1216.
    9. Robert McDonald & Daniel Siegel, 1986. "The Value of Waiting to Invest," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(4), pages 707-727.
    10. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Anne Van de Vijver & Danny Cassimon & Peter-Jan Engelen, 2020. "A Real Option Approach to Sustainable Corporate Tax Behavior," Sustainability, MDPI, vol. 12(13), pages 1-17, July.
    2. Danny Cassimon & Peter-Jan Engelen & Luc Liedekerke, 2016. "When do Firms Invest in Corporate Social Responsibility? A Real Option Framework," Journal of Business Ethics, Springer, vol. 137(1), pages 15-29, August.

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    More about this item

    Keywords

    criminal behaviour; real options; criminal state; Rwanda; Democratic Republic of Congo (DRC);
    All these keywords.

    JEL classification:

    • F5 - International Economics - - International Relations, National Security, and International Political Economy
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • G13 - Financial Economics - - General Financial Markets - - - Contingent Pricing; Futures Pricing
    • G3 - Financial Economics - - Corporate Finance and Governance
    • K0 - Law and Economics - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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