Exit Scam – Example of Sequential Games

Another Example of a sequential game is the exit scam. An exit scam is a crime where a person receives the remuneration but doesn’t provide the agreed service. Exit scams are a typical hazard in illegal markets. But they also appear in many unregulated situations. Tokens and cryptocurrencies also see a lot of those scams.

Example

Suppose, the owner of a drug dealing dark net marketplace has a good reputation. Many people buy drugs and other illegal items on his website. They have to pay in advance by sending bitcoins or other cryptocurrencies. At that moment they have to trust the dealer to fulfill the contract and send the ordered items.

The higher the reputation, the more people are willing to trust this marketplace. The owner of this marketplace would not want to sacrifice this goodwill by cheating on his clients. But if the marketplace owner decides to step down and close the marketplace for some reason, nothing prevents him from conducting an exit scam. He still collects the money but doesn’t send anything back in return.

The reputation will suffer quickly. But this doesn’t bother him because he didn’t intend to continue this business anyway.