Three Essays on the Economics of Governance

Ennio E. Piano

Advisor: Peter J Boettke, PhD, Department of Economics

Committee Members: Christopher J Coyne, Peter T Leeson

Buchanan Hall, #D100
March 21, 2019, 03:30 PM to 04:30 PM


Chapter 1 provides an analysis of the organization of Outlaw Motorcycle Gangs during the first few decades since they first emerged in the 1940s. As they were faced many of the same obstacles as the religious sects studied in Iannaccone (1992), I argue that most of the practices and institutions that characterized outlaw clubs throughout this period can be explained by extending Iannaccone’s model of sacrifice and stigma. In doing so, I show that the economic theory of clubs is a simpler, more coherent framework and has a superior explanatory power than the standard theoretical approach in the literature on outlaw bikers.

 Chapter 2 extends the analysis to the organizational structure of the Hells Angels Motorcycle Club and other major similar groups since the 1970s. Following the economic theory of the criminal firm (Leeson and Rogers 2012), I argue that the Hells Angels’ adoption of a highly hierarchical organizational structure –characterized by a stark division of ownership and control– was an effective response to the transformation of the underground economy during the 1960s and 1970s.

 The third (and last) chapter provides a basic theory of the peculiar practice, common across a variety of Native American societies, known as scalp-taking: the collection of the scalp-lock from a subdued enemy’s during battle. We argue that this institution reduced the ability of warriors to shirk on the battlefield and allowed these groups to tie a warrior’s compensation to a (though imperfect) measure of performance.