Q&A: Assistant Professor Martin Castillo Quintana on Organized Crime, Illicit Markets, and Game Theory

Martin Castillo Quintana joined the University of Chicago Harris School of Public Policy as an assistant professor on July 1, 2023. An applied game theorist, his research focuses on organized criminal groups, such as international drug cartels, which have emerged as one of the thorniest challenges facing modern states.

According to Castillo Quintana, a native of Chile who received his PhD from NYU, these groups undermine states' legitimacy, influence how democratic institutions function, and pose domestic and international security threats to citizens across the globe. He has a particular interest in the Americas.

He joins three other new faculty for the 2023-24 Academic Year. 

We sat down with him recently to welcome him to Harris and learn more about him and his scholarship. 

What can you tell us about your research agenda at a high level?

Profitable illicit markets – such as those for narcotics – foster large-scale criminal activity that can be every bit as deadly as inter-state conflicts, civil wars, and terrorism.  As you might expect, policymaking around these topics is very challenging. Decisionmakers don't necessarily know what drives violence up, what drives violence down. Many policies that intuitively you might think work, end up backfiring. Meanwhile, others that don’t seem to make as much sense, from a gut level, end up having a positive effect.

In my work, I have developed models that inform the policy debate over how different kinds of government actions to disrupt these illicit markets and affect criminal violence, and which also explain how electoral accountability and corruption factor in to producing sound policies.

What do you find works? What seems like it should work, but doesn’t?

I’m currently exploring how incentives work for cartels and gangs: what it is that drives them to behave violently and what drives them to behave peacefully with each other. At some point, states must make decisions that prioritize their limited resources for policing these sophisticated criminal groups. Conventional wisdom says you should target the biggest ones to deter them from engaging in violent behavior. Unfortunately, this accepted knowledge approach hasn’t always worked. What if by targeting the strongest one, you weaken it to the point that other groups (maybe existing, maybe entirely new entrants to a market) try to challenge the leading group? That’s a recipe for less stability and more violence.

These are the questions I’m focused on, striving to understand what policies might work and in what environments. When very good public information about who's the strongest and who's not strong exists, it may make sense to target a specific group – but in environments where information is asymmetric and unclear monitoring is imperfect, these same policies might backfire by creating incentives for groups to challenge the status quo and expand in new directions.

Can you tell us about some of your specific papers?

One of my papers examines the effects of enforcement policies targeting the leaders of criminal groups – essentially jailing or killing drug lords. Previous academic literature discovered that if these policies make drug lords or criminal bosses more shortsighted, they are more likely to defect from their peace agreements and non-aggression pacts, and then you might have violence occur as a result.

But what I show is that that is only partially true. Even if governments enact policies to reduce the security of these groups and make them more short-sighted, if it’s done optimally, it can actually reduce violent conflict. The limited resources can be deployed in a way that minimize violence, which is often a main demand from citizens and to some extent the only main outcome that they might care about.

How does corruption play into the equation? 

I try to understand how corruption and violence are linked together. A lot of people tend to attribute violence to the corruption of officials, for example.  That seems intuitive.  Corruption is usually not the main reason, however, why you see violence in these places. In fact, anti-corruption policies might even trigger violence, because state officials who are corrupt tend to enforce order in anarchic spaces and illicit markets, in a way. When you remove their capacity and motivations to maintain order from the equation, one side effect is likely to be more violence in the short run.

Why do similar polices keep getting tried even if they don’t seem to have much of an effect?

If we consider Plan Colombia and Plan Mexico (also called the Meridia Initiative), the transnational efforts from the United States, Mexico, and Latin American countries to reduce drug flows from Latin America to the US, there’s clear evidence that they have not been working. If this approach to foreign policy has not been working, why is it still pursued so vigorously?  The answer may be that these governments have motivations to show their voters and other constituencies that they’re cracking down and fighting the war on drugs, even if it’s not genuinely effective. It is a good message for their constituencies and may help achieve their foreign policy objectives. Sadly, though, I’m skeptical that these approaches are the optimal way of reducing the inflow of drugs. My work tries to make sense of these cautionary tales, the ways in which seemingly reasonable policies might backfire and also try to understand what are the scope conditions that make certain policies efficient in some contexts, but not others.

What does your research say about the merits (or lack thereof) for legalization? 

Some in policy circles argue that we should legalize most drug markets to reduce violence. What I find, however, is that legalization does not lead to a complete elimination of violence. In the short run, it’s going to cause a spike in violence, because these groups that were sharing big revenues from this market, see their profits drying up – because it’s legal now. All of a sudden, these actors have fewer incentives to peacefully share a dwindling pie and more incentives to actually fight over this prize that is soon to disappear.

Are there other reasons that groups might fight? 

My job market paper examined these policies as well, but in context of high uncertainty where groups, especially criminal groups, can only learn about each other's capabilities through conflict. What I find is that any policy is going to increase the uncertainty, and thus, these groups are more likely to go to war because there’s still something to be ascertained about their rivals and the market. And then on top of that, I examine the political aspects of these questions, such as what how electoral accountability should look like and how the state capacity shapes this interaction among these groups.

What’s new for you? 

I have research in the works looking at how criminal groups capture local politicians, and I also have a paper on private militias, which were a non-criminal group example in my study. Naturally, though, the week I started working on this project, the US declared The Wagner Group, the Russian private military entity to be an international criminal group. So, I guess, it became organized crime as well.

All this fits into big umbrella of my long-run agenda of trying to understand how illicit markets work, especially when there’s a degree of anarchy, and what policies might work and might not work in what situations.

Are you teaching your first year at Harris?

Yes, I'm going to teach in the fall.  I will teach the first game theory track for the political economy PhD students, and I'm going to teach two sections of analytical politics. I’m really looking forward to it. 

Why Harris?

I've loved social science all my life, and I’m good at math. When I was at college, even though I was studying engineering, I was a social activist.  During my Master’s program, I discovered game theory – and my imagination started flying. I was like, "You can actually look at all of these political questions that I’ve always been passionate about, using this framework." And where better to study them than at UChicago, where you have an even bigger community because you have the people at Harris, you have people in the Political Science Department, in the Department of Economics, and in the Booth School of Business. Booth even has its own game theory group. It's an environment where I'm very happy just going to seminars and interacting with research driven people. I derive a lot of joy from the day-to-day department life, seminars, and workshops.