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Unpublished Paper
Crime Prospects and Prospect Theory
(2007)
  • Ram Ranjan, Macquarie University
Abstract

This paper models criminal behavior in a dynamic optimization setting where psychological factors such as subjective risk perception and time preferences play a key role in inducing illegal actions. When psychological perceptions over the actual magnitude of the reward and over the subjective risks of finding a victim or of being caught are dynamic, their influence on crime efforts could vary. Specifically, increasing punishment over rewards, ceteris paribus, deters crime, but increasing punishment and monitoring simultaneously, may encourage crime in the long term. It is also demonstrated that it may not be possible to distinguish between the impacts of hyperbolic discounting and probability weighting on criminal behavior.

Keywords
  • Crime Economics,
  • Prospect Theory,
  • Risk Dynamics,
  • Time Preference,
  • Hyperbolic Discounting
Disciplines
Publication Date
Summer November 19, 2007
Citation Information
Ram Ranjan. "Crime Prospects and Prospect Theory" (2007)
Available at: http://works.bepress.com/ram_ranjan/6/