Should the police give priority to violence within criminal organizations? A personnel economics perspective

Abstract

Even among themselves, criminals are not seen as trustworthy. Consequently, a criminal organization needs to incentivize its members, either by threats of violence or by rewarding good behavior. The cost of using violence depends on the resources police allocate to investigating intraorganizational violence. This means that the police may affect the choice of an incentive scheme by the criminal organization. The design of the optimal strategy for crime control has to take this into account. We develop a model of an infinitely repeated criminal labor market where (i) a criminal organization hires and incentivizes members, and (ii) peripheral crime (crime outside the criminal organization) is a stepping stone to a career in organized crime. We establish that there are two possible optimal strategies for the police. (i) There are situations in which the optimal strategy for the police is to use all of their resources to decrease the efficiency of criminals. (ii) In other situations, the optimal strategy for the police is to spend the minimum amount of resources to ensure that the criminal organization cannot punish disloyal criminals, and spend the rest of their resources to decrease the efficiency of criminals.