Please use this identifier to cite or link to this item: http://hdl.handle.net/2381/8300
Title: The Behavioral Economics of Crime and Punishment
Authors: Sanjit Dhami, Sanjit
al-Nowaihi, Ali
First Published: Jul-2010
Publisher: Dept. of Economics, University of Leicester
Abstract: The Becker proposition (BP) is one of the founding pillars of the modern literature on Law and Economics. It states that it is optimal to impose the severest possible punishment (to maintain e¤ective deterrence) at the lowest possible probability (to economize on enforcement costs). The BP is not consistent with the evidence. This is known as the Becker paradox. Using evidence from a wide range of phenomena we show that none of the proposed explanations for the Becker paradox are satisfactory. The BP has largely been considered within an expected utility framework. We clarify the Becker proposition and its welfare implications under expected utility. We show that BP also holds under rank dependent expected utility and cumulative prospect theory, the two main alternatives to expected utility. al-Nowaihi and Dhami (2010a) recently propose composite cumulative prospect theory that combines prospect theory with cumulative prospect theory. Under plausible conditions CCP is able to resolve the Becker paradox. Our article opens the way for incorporating non-expected utility theories into an economic analysis of criminal activity.
Series/Report no.: Papers in Economics
10/14
Links: http://www.le.ac.uk/economics/research/discussion/papers2010.html
http://hdl.handle.net/2381/8300
Type: Report
Appears in Collections:Reports, Dept. of Economics

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