Journal Article

How to Organize Crime

Mariagiovanna Baccara and Heski Bar-Isaac

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 75, issue 4, pages 1039-1067
Published in print October 2008 | ISSN: 0034-6527
Published online October 2008 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/j.1467-937X.2008.00508.x
How to Organize Crime

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  • Information, Knowledge, and Uncertainy
  • Law and Economics
  • Production and Organizations

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In criminal organizations, diffusing information widely throughout the organization might lead to greater internal efficiency (in particular, since these organizations are self-sustaining, through enhancing trust). However, this may come at the cost of leaving the organization more vulnerable to external threats such as law enforcement. We consider the implications of this trade-off and characterize the optimal information structure, rationalizing both “hierarchical” structures and organization in cells. Then, we focus on the role of the external authority, characterize optimal detection strategies, and discuss the implications of different forms of enforcement on the internal structure of the organization and policy. Finally, we discuss a number of applications and extensions.

Keywords: D23; D83; K42

Journal Article.  18112 words.  Illustrated.

Subjects: Information, Knowledge, and Uncertainy ; Law and Economics ; Production and Organizations

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