Saturday, October 2, 2010

Pirate Economics

A forthcoming article in the Journal of Economic Behavior & Organization, "Pirational Choice: The Economics of Infamous Pirate Practices," looks at the economics of pirate practices. A pdf is available on the author's web site.

This paper investigates the economics of infamous pirate practices. Two closely related economic theories—the theory of signaling and the theory of reputation building—explain these practices. First, I examine the pirate flag, “Jolly Roger,” which pirates used to signal their identity as unconstrained outlaws, enabling them to take prizes with out costly conflict. Second, I consider how pirates combined heinous torture, public displays of “madness,” and published advertisement of their friendishness to establish a reputation that prevented costly captive behaviors. Pirates’ infamous practices reduced their criminal enterprise’s costs and increased its revenues, enhancing the profitability of life “on the account”.

HT: Eric Barker and the Barking up the wrong tree blog

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