Drug dealers' rational choices on which customers to rip-off

Drug dealers are infamous for overcharging customers and handing over less than owed. One reason rip-offs frequently occur is blackmarket participants have limited access to formal means of dispute resolution and, as such, are attractive prey. Yet drug dealers do not cheat every customer. Though this is implicitly understood in the literature, sparse theoretical attention has been given to which customers are ripped-off and why.

To address that lacuna, this paper uses the rationality perspective to analyze qualitative data obtained in interviews with 25 unincarcerated drug sellers operating in disadvantaged neighborhoods of St. Louis, Missouri.

We find that dealers typically rip-off six types of customers: persons who are strangers, first-time or irregular customers; do not have sufficient money on hand to make a purchase; are uninformed about going market rates; are deemed unlikely to retaliate; are offensive; or are addicted to drugs. Dealers target these groups due to perceiving them as unlikely to be repeat business; not worth the hassle of doing business with; unlikely to realize they are being ripped-off; in the wrong and thus deserving of payback; and, unwilling to retaliate or take their money elsewhere.

Our findings are discussed in relation to their practical implications, including the importance of giving blackmarket participants greater access to law, and how customers may prevent being ripped-off.