Extinction Bounties

Policy-based deterrence for the 21st century.

Policy-Research Disclaimer (click to close)

Extinction Bounties publishes theoretical economic and legal mechanisms intended to stimulate scholarly and public debate on catastrophic-risk governance. The site offers policy analysis and advocacy only in the sense of outlining possible legislative or contractual frameworks.

  • No Legal or Financial Advice. Nothing here should be treated as a substitute for qualified legal counsel, financial due-diligence, or regulatory guidance. Stakeholders remain responsible for ensuring their actions comply with the laws and professional standards of their own jurisdictions.
  • Exploratory & Personal Views. All scenarios, numerical examples and opinions are research hypotheses presented by the author in an academic capacity. They do not represent the views of the author’s employer, funding bodies, or any governmental authority.
  • Implementation Caveats. Any real-world adoption of these ideas would require democratic deliberation, statutory authority, and robust safeguards to prevent misuse. References to enforcement, penalties, or “bounties” are illustrative models, not instructions or invitations to engage in private policing or unlawful conduct.
  • No Warranty & Limited Liability. Content is provided “as is” without warranty of completeness or accuracy; the author disclaims liability for losses arising from reliance on this material.

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Our 2-minute elevator pitch

02. The Gist - Using economics and game theory to bust criminals of any sophistication

Previous: 01. The Hook - What if Wrongdoers Paid for Their Own Busts?

Scenario: You run a modest weekend operation moving party drugs in a mid-sized city. Nothing complicated: one upstream supplier, who sells the drugs to you, which you give to your two runners, which they distrbute to four nightclub clients. A handful of individuals here and there, more because your runners know and trust them. Minimum knowledge of who’s involved, up and down the chain. The cash covers rent and a few luxuries, and you haven’t had to get your hands dirty yet. Your two runners call you bossman.

You’re scrolling TikTok Thursday night when the state police account runs a new video that freezes the blood in your veins. With an uncharacteristically upbeat song from the 2010s in the background police officers clumsily dance to the on-screen text:

To say you flip out would be an understatement. You immediately understand this is going to be no ordinary war on drugs. $100k is more money than most people in this part of town have ever seen in one place make in a year. And if you’re this panicked, you can’t imagine how people who were less discreet are feeling right now.

You pore over the URL provided to get up to speed on exactly what this means. You learn most everything we have discussed so far about how fine-insured bounties work, and get to work trying to think of a way out of the way of this fast-approaching train.

On Friday you call your two runners over, each for a one-on-one. To your surprise the first one, a guy you’ve known from high school, sounds loyal to a fault. He says he wouldn’t want to turn you in. You’ve been good to him. The second one, a kid whose abusive father you helped take care of some time ago, owes you a debt as well, but is honest that $100,000 is a lot of money. Both of them appear very, very scared about what’s going to happen to them.

You call in runner #1 hidden in the bathroom to meet runner #2. They didn’t know each other. Runner #2’s face blanches, but you reassure him you’re not about to get violent. You dug into the details and worked out a plan that will let all three of you collect some cash, exit the industry, and then get the hell out of dodge before anyone comes back to enact their vengeance. Both sigh a sigh of relief. “That’s what you get when you trust the bossman,” runner #1 says.

You rake through your phones, amassing a treasure trove of data on your laptop of times what was sold when to whom. You make no effort to hide yourselves in the act - if you turn in yourself for the bounty, after all, it will just get paid back to you, while also granting you immunity against anyone else who might be trying to implicate you. You’re not sure exactly how many bounties will be awarded, but if you manage to nab at least the supplier and the four clients, that’s $500,000 split three ways.

The local police have teamed up with a private escrow company in the area to allow “dead drops” prior to the deadline. Any evidence you submit is encrypted and disbursed to the cops at midnight at the turn of the month. You make the drop, get a local paralegal on retainer just in case, and then skip town to spend time with your parents.

Six weeks later, the paralegal returns with good news: Your case under the new law did indeed lead to the conviction and fining of all 5 prime suspects, and 12 other names in the dead drop that were not pinned by other sources (the police had a record number of dead drops per the new policy). You and your two runners, of course, will also be fined - but the money will officially be funneled through the paralegal to his whistleblower clients, who have elected to remain anonymous. Exactly as planned. When you get back to town, everyone you’re involved with already knows you got hit with the fine too, and never find out that you yourself were the one who supplied the evidence. Getting out of the game is easy after that, because it’s practically nonexistent afterwards anyway.

Years pass. Your $800,000 (at your runners’ behest, you didn’t split the $1.7 M exactly 3 ways) doubled, then doubled again thanks to some smart investments on your part. One day you come across a video of a black metal band performing in Norway on YouTube - the singer is runner #2! So that’s what he did with the money. And what’s the the crowd is chanting - the name of the band? “Bossman! Bossman! Bossman!”

The above story demonstrates a unique and very important property whistleblower fine-based justice schemes have when compared to most conventional schemes of detection and prosecution: The ability to break up organized crime, crime with powerful and intelligent players actively working to try to cover their tracks.

Fine-insured bounties are powerful tools against all kinds of criminal acts. But they really come into their own in these kinds of scenarios, thanks to the game-theoretic environment they set up for everyone involved, turning your closest colleagues into your most terrifying enemies. But first let’s cover our bases with the fundamental economics of crime and its prevention.

The economics of deterrence

In his field-defining work Crime and Punishment: An Economic Approach, Nobel Prize-winning economist Gary Becker showed crime can be discouraged if the expected punishment outweighs the reward. Expected punishment has not one, but two important factors:

Punishment likelihood itself depends on how likely the crime is to even be detected in the first place, and then how strong of a case the prosecutors can put together to how it really happened.

If you have ever wondered why older societies such as medieval Europe or Qing dynasty era China used the death penalty for so many seemingly minor things, this is a big part of why. State authorities at that period of human history had a very low chance of actually detecting something like e.g. forgery, so in order to deter criminals they had to ratchet up just how big the potential punishment actually was if you did get caught. Conversely, as our societies have improved their ability to detect crimes, our stomach for policies like “Forgery is punishable by death” has rightfully taken a nosedive.

Fine-insured bounties takes this two-factor principle and runs with it. As we have alluded to, there is good reason to believe that our odds of both crime detection and prosecution rapidly climb to 100%.

  1. Detection, the critical first step in the criminal justice kill chain, recieves an overwhelming advantage because there are simply so many hungry, hungry eyeballs just waiting for a chance to cash you in.
  2. Evidence collection, the critical next step for a successful prosecution, is likely to experience rapid innovation from the specialized professions that develop to deal with these new fines (bounty hunters and liability insurers).

One point which is worth making explicit is that #1 and #2 are not actually separate points in reality - we just model them as so. But in reality, it is likely that specialized bounty hunters will themselves offer smaller cash rewards to the general citizenry to provide whatever evidence they have that might lead to a successful prosecution. That allows citizens who have some dirt but don’t want to take on the effort (or risk) of becoming bounty hunters themselves to still effectively profit off of what they see and hear with minimal downside.

A high prosecution rate gives us a lot of leeway in deciding where exactly we want to turn the dial to in terms of how big the fine is. In Dr. Robin Hanson’s original formulation, the fine for a crime should equal the full societal harm of the crime, adjusted for the odds of getting caught. Actually calculating that full societal harm can be difficult, but there are experts in e.g. data science who have techniques which can get us in the ballpark.

Our main interest at Extinction Bounties, for reasons we’ll get into later, is crime deterrence, not crime punishment as such. The crime suite we are interested in here are ones where seven-figures per person feels to be a woeful underestimate. But, even if the math says we’re undercharging, when fines are set that high, and when quick detection is near-guranteed, the payout math for a would-be criminal changes dramatically. Suddenly, even considering a highly illegal act in public becomes extremely reckless, as you are practically begging bounty hunters to home in on your case. No rational actor takes the risk if they’re likely to lose far more than they’d gain.

Organized crime and the game-theoretic superpower

Let’s return to the theme of our story above. Would you have been safe if you ran literally everything by yourself? In theory, it’s possible that one person, working in total isolation from others, could develop an entire drug from scratch, sell it totally anonymously, and practice perfect opsec. In practice, this seems unlikely in a world so interconnected that no one person can even make a commercially-viable pencil by themselves. Such actions would require both capital (grow lamps, etc.) and labor (drug couriers, etc.) to help run the project. They soon become vital if the project actually proves lucrative and one wants to scale it out. Before you know it, your one-man operation has grown into true organized crime, similar to every other drug cartel or mafia out there.

Our standard policing regime does not deal with organized crime well. Organized criminals get very good at hiding their tracks and enforcing a code of silence among their members. In a sense you could say they have specialized their labor in the production of crime. By controlling the flow of information vigorously, organized criminals are able to push their Beckerian detection rate down far lower than even most criminals acting alone achieve (no self-respecting drug lord is going to let you arrange deals without a burner phone). Add into this the fear that potential insiders who want to go to the police have about the police themselves, and you have a recipe for letting almost all organized crime go uncaught, and unanswered for.

This is where game theory, the mathematical study of strategic decisions, reveals a “superpower” latent in whistleblower-fine-based mechanisms like FIBs. Normally, each person feels protected by the enterprise’s code of silence among their peers. But with a big enough bounty, applied on a per-head basis, the person who defects first wins big. (Paying a bounty to yourself, counterintuitive as it may seem, is a feature, not a bug here!)

It’s an n-player version of the classic prisoner’s dilemma: as the group grows, the chance someone will defect and claim the bounty quickly rises to near certainty. For example:

In other words, multi-agent enterprises in particular are virtually doomed to fail under a FIB regime, because even low individual betrayal probabilities compound dramatically. The loyalty must be perfect to avert this - nearly impossible when early retirement awaits the first credible whistleblower.

Real world examples of whistleblower-paid bounties busting organized crime

Precedent for the exceptional corruption-busting power of bounties paid directly to whistleblowers abound in the United States thanks to policies such as the Security Exchange Commission (SEC)’s whistleblower awards and the False Claims Act implemented in many states. While these are not fine-insured bounties proper, and lack the vital role the insurer plays (which we will look deeper into in a future post), they are similar enough to illustrate the efficacy of this part of the mechanism. Here we illustrate two of the largest payouts in recent history.

Exhibit A: Biogen’s marketing kick‑back plot funds a $266 million windfall

Former Biogen employee Michael Bawduniak spent seven years documenting covert payments that steered doctors toward Biogen’s multiple‑sclerosis drugs. When the United States Department of Justice settled the case for $900 million in  2022, Bawduniak received roughly $266 million, or about 30% of the federal proceeds, under the False Claims Act (sources: Department of Justice, PR Newswire, Bloomberg). Not bad for a few years of saved documents.

Exhibit B: The $279 million Ericsson whistleblower

In May 2023 the SEC announced a record $279 million whistleblower award, dwarfing the previous $114 million record set in 2020, to an insider whose tip helped uncover Ericsson’s multinational bribery network, a scandal the telecom giant had originally settled for about $1.06 billion in 2019 (sources: Reuters, Department of Justice, SEC). The SEC has not disclosed the whistleblower’s identity in accordance with their whistleblower detection rules.

The SEC program in particular has so far distributed almost $2 billion to nearly 400 insiders since 2011 - proof to us that even the largest and best-hidden conspiracies reliably spring leaks when the first mover has such a strong incentive to do so. Building on the SEC’s phenomenal success, the United States Department of Justice launched a Corporate Whistle‑blower Awards Pilot Program that, in keeping with the game-theoretic defect-dominant strategy, rewards only “the first to come forward.”

Conclusion

The combination of economics and game theory makes Fine-Insured Bounties uniquely powerful. They create intense, rational fear of committing wrongdoing and foster distrust among potential co-conspirators. In practice, few crimes remain secret, as betrayal becomes the dominant strategy.

Astute readers will notice that the role of the liability insurer has not come into prominence in this article. That is the topic of our next essay. We at Extinction Bounties think, given the nature of the crimes we are attempting to deter, they are as vital a player as the bounty hunters themselves - but if you don’t have the time to read that next essay, let us note that a well-designed mechanism generally has desirable outcomes even when large parts of it are missing or not functioning as intended.