Trusting the Untrustworthy: How trust is established and maintained in illicit markets and organised crime groups

Abstract

Illicit markets and organised crime groups are characterised by risk and uncertainty. Inherent information asymmetry and the ubiquitous threat of law enforcement and adversaries, like scammers, create an environment that where cooperation and exchange would seem unlikely. To profit in illicit markets, however, cooperation is necessary and, given the potential payoffs, illicit actors find means to overcome the barriers to collaboration. This article explores how criminal actors cooperate in what would be assumed to be an uncooperative environment. Without the usual legal mechanisms, they establish trust to mitigate against such risks. This is done by leveraging social capital, emitting signals that are cheap to emit but costly to fake and using the threat of violent sanctions. In online markets, where anonymity generates further problems for cooperation, actors also use built-in reputation systems and chat forums to mitigate risk.