Social and Behavioral Sciences Commons^™

The Social Cost Of Blackmail, Oleg Yerokhin

Oleg Yerokhin

Despite the fact that blackmail constitutes a voluntary transaction between two parties, it is deemed to bea criminal offense in most legal systems. The traditional economic approach to this so-called "paradox of blackmail" emphasizes welfare loss generated by the costly rent-seeking activities of potential blackmailersas the primary justification for its criminalization. This argument, however, does not extend to cases inwhich potentially damaging information about the victim was acquired by the blackmailer at no cost. Italso does not seem to shed light on a related puzzle: why is it legal for a potential victim to bribe theother party with the purpose …