Abiel, I edited your paper and added my comments in blue. Let me know if you have any questions.

Two Party Playlets and Risk Profiles

-- By AbielGarcia - 14 Apr 2010

"First, I must solicit your strictest confidence in this transaction. This is by virtue of its nature as being utterly confidential and top secret." As I scanned the first few lines of the e-mail, I realized that my junk mail filter had let another e-mail scam through. A week later I received an email from Anthony Pallone warning me of people phishing. While I appreciated the e-mail, I knew that there was no way I would have fallen for that congame. However, given our recent class discussion on Leff's Swindling & Selling, I started thinking about how one might adapt a congame to the idiosyncrasies of one's mark.

Leff describes this basic congame, commonly called the "Spanish Prisoner," as "a form of bunco in which two monopolies are personified and then dramatized in a play in which they are the absolutely irreplaceable complements of each other for the production of a particular bundle of wealth." In his discussion of the Spanish Prisoner, Leff asserts that the uniting factor of most swindles is that they involve casting, altercasting, and outcasting and that the only essential changes involve the plot and dramatis personae (characters) of the con.

Yet, one might also consider how to adapt the story of the con to fit different marks. Should the story be more credible? Should the potential profits be adjusted? Should the timeline be drawn out? By analyzing the risk profile of "the mark," the prisoner can grasp a better understanding of how to draw the mark in.

You don't have to use my introduction. However, I thought it might be entertaining to use an actual quote from the e-mail you received as a way of hooking your reader rather than just telling your reader that you received an e-mail.

Risk Profiles

In a general, there are three main categories of players in risk behavior analysis: risk-averse, risk neutral, and risk-seeking. A risk-averse individual favors certain outcomes over risky outcomes even it means settling for a lower profit. A risk neutral individual is indifferent as long as the risk is equal to the expected profits. A risk-seeker will prefer a riskier outcome if the payout is higher. The risk profile of a con's intended target has a significant effect on what types of casting must be used for the con to be successful.

Leff's Con Using Risk Analysis

By applying risk behavior analysis to every decision that the mark makes, the prisoner can discern how to maximize his payout for each mark. In Leff's Greek Prisoner scenario, the mark's risk profile affects how he reacts to the initial request for $150 and the rest of the decisions he makes. A risk-averse individual would focus on the certainty of the outcome. For this type of person, the credibility of the prisoner has to be high. If the probability of the payout is too low, then the risk-averse individual would disregard it, even if his potential profit is higher than any other option. On the other hand, a risk-seeker would be easier to hook because he would be focused on the high payout of $300,000. Thus, the prisoner must realize that if he wants to hook a risk-averse individual, he needs more credibility at the outset of the con then when trying to hook a risk-seeking individual.

The same principles apply when making decisions within the context of the con. Even after initially committing, the risk-averse individual may need more evidence of credibility before he makes the decision to send the money, just as Dr. Tzourous wrote the second letter asking for further proof. Yet, the risk-seeking individual will not require as much pushing or persuading to give the money up. Thus, the prisoner, by understanding what kind of behavior the mark exhibits, can adjust the ongoing plot of the con to fit the mark.

Is one's susceptibility to a con really dependent on one's risk profile? Or is it more dependent on one's naivete? After all, isn't it possible for an individual to be extremely risk-seeking, but at the same time, recognize that a letter or e-mail is a scam? Also, you make the point that a prisoner needs to increase his credibility when pursuing a risk-averse individual. However, wouldn't a prisoner want to be as credible as possible toward all of his marks?

The Con as a Whole

If the mark, when presented with the initial option to enter the congame, has other investment opportunities, then the prisoner, again, has to increase his credibility. Leff argues that the prisoner game is a bilateral monopoly, although not a perfect one. However, if the con is looked at as an investment, then the monopoly power of the prisoner is lessened, especially if the mark is risk-averse. The con turns into a monopoly for the mark, who alone wields the power to continue the con. Not until the mark first responds does the con become a bilateral monopoly. The con, in itself, is a very risky prospect for the mark, especially if he has other licit investments that are more certain. For example, a risk-averse person would rather take $40 than flip a coin to get $100, even though the expected payout of flipping the coin is higher. The prisoner must realize that he is not only trying to hook the mark within the con itself (i.e. getting the doctor to pay the additional expenses of leaving the country), but also trying to hook the mark in the greater context of investment opportunities. By understanding the mark's risk profile, the prisoner can manipulate his own credibility in order to make sure the initial hook brings in the mark.

The con isn't a "very risky" prospect for the mark, it is a hopeless prospect that is disguising itself as a guaranteed investment. In this sense, the con may appear to be a safer bet than other licit investments (if the mark falls for the con).

What does this all mean?

What this all means, in the context of selling, is that understanding a mark's risk profile is vital to ensure that the mark will continue to fall for the con. Today, cons are done on a mass basis, with generic e-mails flooding servers hoping for a bite from a mark that fits the role. Yet, this type of generic e-mail only hooks a self-selecting pool of risk-seeking individuals and misses on many other types of people. The initial communication to the mark is competing as an investment opportunity with other licit or illicit opportunities. The con man needs to tailor the credibility to the risk profile of each mark in order to appeal to a wider audience. Once the mark responds, the imperfect bilateral monopoly game begins with the prisoner adjusting his credibility to the amount of money requested with each communication. Using risk behavior analysis, one can understand what to change in a con to land "the big fish."

Why didn't you fall for the e-mail scam that was sent to you? Is it because you're risk-averse? Or is it because you're smart enough to know a scam when you see one? For most people today, these types of e-mail scams aren't really competing with licit investment opportunities like stocks and bonds. It might be interesting to explore how conmen can establish credibility by using modern day conmen as examples (e.g. Bernie Madoff).

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