An Economic Analysis of Threats and Their Illegality: Blackmail, Extortion, and Robbery

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.