Phorced to phish: benefits of a phishing equilibrium

Purpose - A salesman calls up to offer you a “much” better phone plan. Before you know, you have changed to this new plan, which not only exceeds your needs, but also “procures” a six-month free subscription to an online music service. You needed neither and pay more: you have just been “phished” as Akerlof and Shiller would say in their recent book Phishing for Phools. Furthermore, their phishing equilibrium dictates that if your company does not phish others will, so you phish to survive. The purpose of this paper is to present a formal analysis of phishing and phishing equilibria with surprising potential benefits to consumers rather than scamsters. Design/methodology/approach - The paper provides a conceptual/formal (game theoretical) analysis of phishing in markets. Findings - Being an honest trader may actually, under certain circumstances, be an advantage in a market contrary to Akerlof and Shiller’s thesis Phishing for Phools. Research limitations/implications - Phishing for Phools may have its limitations when viewed from an evolutionary game-theoretical perspective which has positive implications for behavioral finance and significance of a phishing equilibrium in markets populated by honest as well as dishonest traders. Practical implications - The paper shows that Phishing for Phools may not always be a winning strategy contrary to many current business schemes from phone plans to selling pharmaceutical products. Social implications - The paper reveals important differences between honesty, dishonesty, and trust between traders in a market. Originality/value - This paper provides, to the authors’ knowledge, the first in-depth formal and conceptual analyses of phishing and phishing equilibria.