THE CON GAME: Explaining the Existence of Con-Artists

This paper tries to add an economic perspective to the academic analysis of con-artists. While extensive psychological literature discusses why con-artists thrive in human societies, no research has been done to discuss economic incentives for con-artists. This paper proposes a simple game theoretical model to see when con-artist arise and what drives their decisions in the context of a simple investment game. It finds that in equilibrium, there is always room for con-artists to enter the market, and that the main driver for clients to invest is the rate of return, while the con-artist relies on the invested amount and his costs of set-up to guide his decisions.