Extinction Bounties

Policy-based deterrence for the 21st century.

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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.

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Intellectual History of Fine-Insured Bounties

Fine-Insured Bounties: An Intellectual History (1950–Present)

Early Foundations: Deterrence Theory and Optimal Punishment (1950s–1970s)

The modern economic analysis of crime began in the 1960s with Gary Becker’s seminal work “Crime and Punishment: An Economic Approach” (1968) (source). Becker modeled criminals as rational actors who respond to incentives, laying out how the probability of apprehension and the severity of punishment interact to deter offenses. Crucially, Becker highlighted the efficiency of monetary fines as a form of punishment. He noted that fines are essentially transfer payments (costs to offenders but benefits to others) and thus have near-zero net social cost, unlike imprisonment which consumes resources in prisons, guards, and administration.

Becker even suggested using fines whenever feasible—for example, via installment payments—to replace costlier punishments (Crime and Punishment: An Economic Approach - JSTOR). This created a foundation for later ideas: if criminals could be made to pay sufficiently large fines, society could deter crime without resorting to expensive incarceration. The fine-insured bounty (FIB) concept builds directly on this insight by proposing a system where all punishments are fines backed by insurance.

Building on Becker’s ideas, economists in the 1970s explored incentive structures for law enforcement. Gary Becker and George Stigler (1974) proposed an early market-based enforcement idea: pay law enforcers with the fines they collect (Law Enforcement, Malfeasance, and Compensation of Enforcers). In “Law Enforcement, Malfeasance, and Compensation of Enforcers,” they argued that giving police and inspectors a stake in fines (essentially a bounty) would align their incentives and reduce corruption—since an enforcer who keeps fines would not accept a bribe lower than the fine.

This foreshadows the FIB system’s use of bounties to motivate enforcers. Around the same time, William Landes and Richard Posner (1975) examined the concept of “The Private Enforcement of Law.” They pointed out that private parties could, in theory, enforce laws for profit, and discussed blackmail as an “unconventional example” of private law enforcement (The Private Enforcement of Law - JSTOR).

In the case of blackmail, a person discovers someone’s wrongdoing and induces the wrongdoer to pay to avoid official punishment—effectively a negative bounty system. Landes and Posner noted that a blackmailer can extract up to the amount the offender would pay to avoid legal sanctions. Their analysis highlighted both the potential and pitfalls of privatized enforcement: while it creates incentives to detect crime, it can lead to socially costly outcomes (where the blackmailer profits but the wrongdoer avoids formal punishment).

Their work is an early theoretical exploration of the very mechanism Hanson’s FIB system later tries to harness: bounty hunting within a legal, regulated framework that avoids the downsides of illicit blackmail.

Libertarian Visions of Privatized Enforcement (1970s–1980s)

Outside academia, libertarian scholars and economists in the 1970s developed bold proposals for fully privatizing law enforcement, many of which anticipated elements of the FIB model.

Philosopher Robert Nozick’s “Anarchy, State, and Utopia” (1974) hypothesized a society without a state, where protection agencies compete to provide security and enforcement. Nozick argued such agencies would eventually form a minimal state, but his work introduced a broad audience to the idea of competing private enforcers and raised questions about how they could be regulated or constrained.

Around the same time, libertarian economist Murray Rothbard described how private insurance-based enforcement might work. In “Society Without a State” (1975), Rothbard envisioned that individuals would buy crime insurance from companies, and those insurers would then pursue criminals to recoup losses (Society Without a State - Mises Institute).

If a client was victimized, the insurer would compensate the victim and then hunt down the aggressor to recover the payout, effectively operating as a private police force. Rothbard noted a “natural market connection between insurance companies and defense service, since they need pay out less in claims the more effectively they can reduce the rate of crime.” This model contains the seeds of FIB: it pairs insurance with enforcement incentives, though in Rothbard’s version the insurance is for victims rather than perpetrators.

Economist David D. Friedman extended these ideas in “The Machinery of Freedom” (1973). Friedman described a scenario in which government police are replaced by private protection agencies selling security services. Notably, he suggested these agencies might guarantee outcomes by insuring their clients against losses from crime (The Machinery of Freedom - Slate Star Codex Review).

In Friedman’s hypothetical, if a theft occurs, the victim’s agency pays for the loss and then strives to catch the thief, potentially reclaiming the stolen goods or exacting compensation. He wrote that agencies could either focus on preventive measures or “take no preventive action at all, but make great efforts to hunt down criminals guilty of crimes against their clients,” effectively pursuing offenders after the fact. This approach—insurers funding enforcement efforts to avoid paying claims—is closely aligned with the FIB framework, except that FIB flips the script: instead of insuring victims, it insures potential offenders so that any harm they cause (fines) will be paid for sure.

Both visions marry the idea of insurance with bounties for catching wrongdoers, creating a market-driven enforcement mechanism.

Libertarian legal theorists also advocated turning crime into a matter of restitution rather than punishment, an idea complementary to FIBs. Randy Barnett, in the late 1970s (e.g., “Restitution: A New Paradigm of Criminal Justice,” 1977), argued that the criminal justice system should focus on making offenders compensate victims, rather than imposing harm for harm’s sake.

In this paradigm, crimes are treated like torts—the offender owes a debt to the victim. While Barnett’s vision still left enforcement to victims or the state, it reinforced the notion that monetary sanctions can replace prison for most crimes. If offenders must pay for the damage they cause, a natural question arises: how do we ensure they pay in full?

One solution: require offenders to have the means (through bonds or insurance) to pay restitution—directly anticipating the insurance requirement later embedded in Hanson’s FIB proposal.

Law & Economics Refines Enforcement Incentives (1980s)

Through the 1980s, scholars of law and economics further developed the theoretical underpinnings of optimal enforcement, setting the stage for a fine-insured bounty system.

A. Mitchell Polinsky and Steven Shavell produced a series of influential papers on public law enforcement. One key result (Polinsky & Shavell, 1984) was that fines and imprisonment should be used in combination such that fines are exhausted first. In other words, the government should “use the fine to its maximum feasible extent before possibly supplementing it with an imprisonment term” (The Optimal Use of Fines and Imprisonment - NBER).

This principle echoes Becker’s earlier point—since fines are cheap transfers, an optimal system would rely on fines as much as possible, resorting to costly incarceration only when fines cannot deter (for example, when offenders are judgment-proof or when fines must be capped below the harm caused).

Shavell also examined scenarios where monetary penalties alone may not suffice. In a 1985 paper on criminal sanctions, he analyzed when non-monetary punishments (like prison) are needed—typically when offenders lack enough assets to pay a deterrent fine or when monetary penalties can’t fully internalize the harm.

The “judgment-proof problem” became a focal point in this literature. It refers to offenders (or injurers) who do not have sufficient wealth to pay for the harms they cause, undermining the deterrent effect of fines or liability.

In 1986, Steven Shavell explicitly addressed this in “The Judgment Proof Problem”. He noted that individuals can cause harm exceeding their assets and insurance coverage (The Judgment Proof Problem - SpringerLink).

To mitigate this, Shavell discussed policy solutions:

The idea of mandatory liability insurance—commonplace today in auto law—directly informs Hanson’s later proposal to require everyone to carry crime liability insurance.

By the late 1980s, the intellectual pieces were largely in place: scholars understood that high fines are economically efficient, that private incentives can be leveraged for enforcement, and that unlimited fines require either sufficient offender wealth or mandatory insurance to back them. What remained was to combine these insights into a coherent system.

Empirical and historical studies during the 1980s also strengthened the case for privatized enforcement models.

Economist Bruce L. Benson’s research (later synthesized in *“The Enterprise of Law,” 1990) chronicled how legal systems functioned with minimal state involvement. He examined medieval and early modern societies—such as Anglo-Saxon England and the American frontier—where law enforcement was largely private or community-based.

In the Anglo-Saxon system, for example, crimes were typically resolved by the payment of weregild (man-price) to victims or their kin, and enforcement of these fines was a private affair backed by the threat of outlawry.

This historical precedent shows a working model of decentralized, fine-based justice—essentially an early form of “fine-insured” justice, where a person’s kinship group acted as a guarantee for payment.

Benson and others illustrated that even complex societies could rely on decentralized enforcement mechanisms with strong incentives (bounties, mutual aid pacts, reputation systems) rather than a monopolistic state-run police force.

These findings gave modern reformers confidence that alternatives to state-run policing were not only theoretical curiosities but had real historical analogues.

Toward Fine-Insured Bounties: Contemporary Proposals and Hanson’s Synthesis (1990s–2010s)

By the 1990s and 2000s, the stage was set for proposals combining monetary sanctions, insurance, and bounty incentives. Several scholars and commentators began explicitly suggesting more market-based approaches to criminal justice.

For example, legal theorists noted the success of qui tam statutes and whistleblower bounties in areas like fraud enforcement—essentially paying private parties a portion of fines for uncovering wrongdoing. Think tanks like the U.S. NCPA and economists such as Morgan O. Reynolds advocated expanding the private sector’s role in law enforcement, from private police patrols to bounty programs for certain crimes. These incremental steps pointed toward leveraging financial incentives and insurance mechanisms to improve deterrence and reduce public costs.

The culmination of these threads came with Robin Hanson’s fine-insured bounty (FIB) model, first introduced on his blog in January 2018.

In “Privately Enforced & Punished Crime,” Hanson outlines a radical but carefully reasoned proposal to “privatize the detection, prosecution, and punishment of crime” (Privately Enforced & Punished Crime - Overcoming Bias).

He explicitly acknowledges the idea is not wholly original—“many similar changes have been proposed before,” he writes—even if proper credit had yet to be sorted out. Hanson’s contribution was to integrate these insights into one comprehensive “package” of legal reforms, and to articulate how the system could work in practice.

The core of Hanson’s FIB system can be summarized as follows:

“All (but one) crime is punished officially by fines, everyone is fully insured to pay large fines, and bounty hunters detect and prosecute each crime.”
(Bounty Hunter Blackmail - Overcoming Bias)

In this system:

Core Mechanisms of Hanson’s Proposal

Hanson’s model carefully addresses key vulnerabilities:

Hanson explicitly ties his proposal back to earlier thinkers:

In his follow-up essay “Bounty Hunter Blackmail” (source), Hanson directly engages critiques like those of Landes and Posner, analyzing the stability of blackmail schemes and proposing structural safeguards to protect the integrity of the bounty system.

In short:
Robin Hanson’s Fine-Insured Bounty system synthesizes decades of law-and-economics theory into a coherent, practical proposal for reengineering criminal justice around market incentives, private insurance, and competitive enforcement.

Extensions and Ongoing Discourse (2018–2025)

Since Hanson’s articulation of fine-insured bounties, the concept has sparked discussion in academic blogs and futurist circles, often in connection with pressing problems that might require strong deterrence.

For example, some commentators have suggested FIB-like systems for deterring dangerous technological developments. In 2023, an essay on LessWrong by “Virtual Instinct” proposed fine-insured bounties to prevent dangerous AI research (Fine-Insured Bounties as AI Deterrent — LessWrong).

The idea was to heavily fine anyone pushing forward AI capabilities and reward whistleblowers—a direct application of Hanson’s crime insurance and bounty model to a non-traditional “crime.”
The post explains that even a moderate fine, if coupled with the risk of being reported by a colleague, could create a strong chilling effect on undesired research (source).

This shows the versatility of the FIB framework:
It can be seen not only as criminal justice reform but as a general mechanism to enforce any regulation or moratorium by decentralizing enforcement.

Influential bloggers like Scott Alexander (Astral Codex Ten) have also discussed Hanson’s FIB idea in the context of AI policy.
While acknowledging the theoretical neatness of FIBs, they note the political and ethical challenges—for instance, the risk that universal surveillance and informants-for-profit could be dystopian if misapplied.
Nonetheless, the fact that FIBs are being debated in these contexts demonstrates their impact as a provocative frontier of law and economics.

In academia, the fine-insured bounty concept remains young but is beginning to build on a lineage of scholarship that will likely examine its efficacy over time.

Researchers in law and economics continue exploring hybrids of public and private enforcement:

Hanson’s FIB can be seen as a synthesis of these approaches:

Bounty hunters, driven by profit, serve as an army of decentralized detectives.
The state, rather than micromanaging law enforcement, focuses primarily on setting the right price (fine) for each offense to reflect its true social cost (source).

This transforms law enforcement into something akin to a market for contraband:
Just as piracy at sea was eventually squeezed out through strategic price incentives, so too might crime become unprofitable under a well-calibrated FIB regime.

Conclusion

The evolution of the fine-insured bounty idea from 1950 onward is a rich interplay of economics, law, and libertarian philosophy.

Starting with Becker’s insight that proper pricing of crime via fines can achieve deterrence efficiently (source), the field advanced through decades of analysis about how to align enforcers’ incentives and ensure wrongdoers pay for harm.

Key contributions along the way:

Robin Hanson’s fine-insured bounty system ties these threads together into a bold proposal:
A world where crime doesn’t pay because every criminal has, in effect, posted a bond against their future behavior, and where law enforcement is crowdsourced to anyone eager to earn a bounty.

This narrated bibliography has traced the major works and ideas leading up to FIB—and those expanding on it.

As Hanson himself humbly noted, many pieces of FIB were “proposed before” by others (Privately Enforced & Punished Crime - Hanson); his contribution was to assemble them into a cohesive system.

Going forward, the FIB model invites further interdisciplinary exploration. Scholars will continue examining:

Whether or not any jurisdiction ever fully privatizes criminal justice as Hanson imagines, the concept of fine-insured bounties stands as a culmination of decades of thought about how we deter and deal with crime.

It challenges us to reconsider the basic structures of law enforcement in light of economic incentives—asking, in effect:

What if justice were delivered as a competitive service, backed by insurance and driven by profit, rather than a monopolistic public good?

The answers to that question, sketched by the works in this bibliography, mark a fascinating intellectual journey—from Bentham’s era to the present day of Hanson’s Futurist jurisprudence.

Sources