ABSTRACT
This chapter discusses a scenario that describes the prototypical blackmail case: a third party has acquired information that is damaging to one of two other parties who are about to enter into a relationship, whether marital, business, or otherwise. The blackmailer and his victim enter into a mutually beneficial transaction to keep the information secret. The "puzzle" of blackmail is why this transaction is regarded as a crime. Its illegality is puzzling for two reasons. First, the transaction is voluntary in the sense that both parties expect to gain from it, and the blackmailer by being paid. Second, the act of revealing the damaging information would be perfectly legal. The resolution of the puzzle turns out to depend on the nature of transactions involving information. It is well-established that the production and sale of information presents problems because of its public good qualities.
