Forfeiture of Illegal Gains, Attempts and Implied Risk Preferences

Abstract:     
In the law enforcement literature there is a presumption — supported by some empirical evidence — that criminals are more responsive to increases in the certainty than the severity of punishment. Under a general set of assumptions, this implies that criminals are risk seeking. We show that this implication is no longer valid when forfeiture of illegal gains and unsuccessful attempts are considered. Therefore, when drawing inferences concerning offenders’ risk attitudes based on their responses to various punishment schemes, special attention must be paid to whether and to what extent offenders’ illegal gains can be forfeited, and whether increases in the probability of punishment affect the probability of unsuccessful attempts. We discuss relevant empirical scholarship and policy implications related to our observations.

Number of Pages in PDF File: 16

Keywords: Crime, Deterrence, Risk Preferences, Punishment

JEL Classification: K00, K14, K42

working papers series