Gabriel Benzecry (Northwood University); Garrett Scott (University of Mississippi); Henry Thompson (University of Mississippi)
Abstract
We develop a theory of criminal self-protection. Without secure property rights, criminals struggle to safely accumulate wealth. We argue that criminals can improve their property rights by bribing witnesses around them. Bribing witnesses is especially convenient when bribing rivals and police is prohibitively costly. However, not all kinds of bribes are equally useful. Thus, we suggest that informal governance can be an especially effective kind of bribe because it is cheap for criminals to supply and it is highly valued by witnesses who receive little formal governance. In this way, subsidizing governance to witnesses acts as a form of “hush money” that makes criminals less vulnerable to robbery. We use our theory of bribery to explain the governance provided by drug traffickers to nearby locals in the favelas of Rio de Janeiro. Evidence there supports the predictions of our theory.