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Using Bounded Rationality to Fight Crime

Daniel Pi

University of Bologna - Department of Economics; University of Hamburg - Institute of Law and Economics

February 10, 2013

Law and economics scholars have traditionally modeled criminal deterrence as a function two factors: severity of punishment, and probability of punishment. Gary Becker’s (1968) seminal essay suggested that optimizing on the benefits of crime reduction and the cost of punishment and policing should be the policy objective of the criminal law (at least with respect to deterrence). However, this model has been attacked on two fronts. First, criminological data on crime rates fails to show a strong correlation between the predictions of economic models and crime rates in the real world. Second, developments in behavioral economics suggest that individuals (criminals in this case) often fail to respond rationally to incentives. This paper seeks to reconcile the tension between the results of economic theory, criminological data, and behavioral psychology, offering a more realistic goal for the criminal law: inducing second-order biases not to commit crime.

Number of Pages in PDF File: 28

Keywords: bounded rationality, bias, heuristic, deterrence, criminal deterrence, benevolent biasing, cognitive leveraging

JEL Classification: D03, K14, K42

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Date posted: February 10, 2013 ; Last revised: February 25, 2013

Suggested Citation

Pi, Daniel, Using Bounded Rationality to Fight Crime (February 10, 2013). Available at SSRN: https://ssrn.com/abstract=2214504 or http://dx.doi.org/10.2139/ssrn.2214504

Contact Information

Daniel Pi (Contact Author)
University of Bologna - Department of Economics ( email )
Piazza Scaravilla 2
Bologna, 40125
University of Hamburg - Institute of Law and Economics
Johnsallee 35
Hamburg, 20148
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