Mafia protection is a demanded commodity substituting for trust

Evidence

Protection can nevertheless be a genuine commodity and play a crucial role as a lubricant of economic exchange. In every transaction in which at least one party does not trust the other to comply with the rules, protection becomes desirable, even if it is a poor and costly substitute for trust. This book shows that mafia protection fulfills this role, albeit in an erratic and limited fashion. The market is therefore rational in the sense that there are people who find it in their individual interest to buy mafia protection. While some may be victims of extortion, many others are willing customers. — Diego Gambetta, The Sicilian Mafia The Business of…, 13

Categorization

• XREF: This is the demand-side of the private-protection market — connects directly to the reader’s Gambetta framework and to Milgrom on private judges filling trust gaps.
• SEED: The ‘willing customers vs. victims’ of protection rackets is an angle — the economics of buying protection as a rational substitute for trust.