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141 U. Pa. L. Rev. 1877 (1992-1993)
Economic Analysis of Threats and Their Illegality: Blackmail, Extortion, and Robbery

handle is hein.journals/pnlr141 and id is 1897 raw text is: AN ECONOMIC ANALYSIS OF THREATS AND THEIR ILLEGALITY: BLACKMAIL, EXTORTION, AND ROBBERY STEVEN SHAVELLt The subject of this Article is the making of threats and the working of, and social need for, laws against them. I emphasize blackmail-by which I mean threats to expose information unless money (or something else of value) is surrendered-but I devote attention also to extortion (threats to cause injury to a person or to his property in the future) and to robbery (threats to do immediate physical harm to a person), as well as to certain commonly made threats that are not illegal (for example, threatening to withdraw business unless price is lowered).1 Section I of the Article is concerned with a purely descriptive, theoretical analysis of threats, assuming that parties act in a largely self-interested way and with due forethought.2 The point I initially consider is that to the degree that threats will yield gains, potential threateners will invest effort in obtaining information for purposes of blackmail and, more generally, in placing themselves in positions allowing them to make threats. Likewise, to the extent potential victims fear threats, they will endeavor to avoid becoming vulnerable to threats. This preparatory behavior of threateners and of victims will be affected by legal rules that punish threats. By reducing the anticipated return from threats, the rules discourage threateners from devoting effort to the making of threats and lead victims to do less to protect themselves from threats. t Professor of Law and Economics, Harvard Law School. I wish to thank Louis Kaplow and A. Mitchell Polinsky for comments, Paul Taylor for research assistance, and the National Science Foundation for research support. 1 The term blackmail is sometimes interpreted more broadly than it is here, to encompass extortion. In fact, the early meaning of blackmail was limited to threats to do physical harm. For a recent discussion of blackmail and extortion, see James Lindgren, Unraveling the Paradox of Blackmail, 84 COLUM. L. REV. 670, 673-76 (1984); for an extensive description of blackmail and extortion in English law, see Glanville L. Williams, Blackmail, 1954 CRiM. L. REV. 79; and for an examination of the evolution of the crimes of robbery, blackmail, and extortion in English law, see W.H.D. Winder, The Development of Blackmail, 5 MOD. L. REV. 21 (1941). 2 This feature of the analysis (along with its consequentialist normative aspect, to be described) is, of course, the hallmark of economic analysis of law and explains the use of the word in the title of the present Article. (1877)

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