Counterfeit Money

Encyclopedia of Law and Economics, edited by Juergen Backaus, Springer New York, Forthcoming

9 Pages Posted: 22 Dec 2014

See all articles by Lones Smith

Lones Smith

University of Wisconsin at Madison - Department of Economics

Elena Quercioli

University of Texas - Pan American - College of Business Administration - Department of Economics & Finance

Date Written: November 20, 2014

Abstract

Counterfeit money is the topic of television, movies, and lore but hardly seen by most of us - for only about one in ten thousand notes is found to be counterfeit, annually, in the USA (Judson and Porter 2003). And while the value of globally seized and passed counterfeit American dollars has exceeded $250 million in recent years, it is a multi-billion-dollar potential crime. Here, we distill a recent model of counterfeit money as a massive multi-player game of deception. Bad guys attempt to pass forged notes onto good guys. Good guys expend effort to verify the notes, in order to avoid potential losses. The model sheds light on how the counterfeiting rates, the counterfeit quality, and the cost of attention vary in response to changes in the banknote denomination, the technology, and the severity of the legal penalties for counterfeiters.

Keywords: Deception games, seized money, passed money

JEL Classification: K14, K42, C73, C78

Suggested Citation

Smith, Lones and Quercioli, Elena, Counterfeit Money (November 20, 2014). Encyclopedia of Law and Economics, edited by Juergen Backaus, Springer New York, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2541411

Lones Smith

University of Wisconsin at Madison - Department of Economics ( email )

1180 Observatory Drive
Madison, WI 53706-1393
United States
608-263-3871 (Phone)
608-262-2033 (Fax)

HOME PAGE: http://www.lonessmith.com

Elena Quercioli (Contact Author)

University of Texas - Pan American - College of Business Administration - Department of Economics & Finance ( email )

1201 W. University Drive
Edinburg, TX 78539-2999
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
105
Abstract Views
807
rank
311,337
PlumX Metrics