Cooperation, Surplus sharing and Punishment in Criminal Settings

• In Event: Rational Choice Perspectives

Abstract

Violence is neither omnipresent nor constant in the criminal world. Levels of violence vary across types of illicit markets, activities, segments of the supply chain, geographies, and time. Under which conditions do we observe a cooperative as opposed to a violent illegal environment? This paper provides a comprehensive framework to study the dual relationship between cooperation and violence in settings where no legal dispute settlement and contract enforcement mechanisms are available. It is organised as follows: first, a theoretical model is developed, followed by a discussion of its empirical implications.

We consider a repeated version of a two-players anti-cooperative game in which players can choose to either cooperate, defect, or exert violence. When payoffs from cooperation are high for both players relative to their outside options (defection), the threat of a relational breakdown is sufficient to sustain cooperation. Otherwise, violence is necessary. We conclude the theoretical analysis by studying the interplay between the cost of violence and the ability to extract more value from the relationship. The empirical discussion draws on previous research and discusses concrete case-studies to illustrate the mechanisms at work. We use the framework to explain why in high-value-generating activities such as intercontinental drug trafficking, cooperation is sustained without violence, whereas rent-extraction activities, such as criminal governance, rely on threats of violence.

The paper contributes to the literature on violence and cooperation in extra-legal settings, thereby enhancing our understanding of the functioning of criminal markets and the relationships among criminal actors.

Authors

• Alae Baha, University of Oxford

• Zora Lea Hauser, University of Oxford