Monday, September 7, 2009

Solving Adverse Selection Mafia Style

Under Japan's revised Anti-Organized Crime Law, higher-ranking gang members can be sued for lower-level members' activities. Potential "new hires" (who will come in as low-level members) know whether they are familiar with the dictates of the law while the "employers" (high-level members) don't know who is more or less likely to get them into trouble. I suspect some high-ranking members of the Yamaguchi-gumi purchased a copy of everyone's favorite managerial economics textbook because they are now using a screen to identify the "good" type neophyte gangsters.

Japan's largest and most notorious organized crime group, the Yamaguchi-gumi, is forcing members to take a "gangster exam" in order to reduce costly damages suits, police have discovered.

Questions included "What kind of activities are banned?" with "dumping industrial waste; bootlegging fuel; theft of construction vehicles and other expensive items; phone fraud scams" etc. listed as the correct answers.

The model answer to the final question, "What are you required to do in all your activities?" was: "report and consult with my bosses."

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