The Economics of Scams
Review of Law and Economics 13(1): 1-18
Posted: 23 Feb 2017
Date Written: March 2017
This paper offers one of the first economic analyses of scams. Its major finding is that, unlike other crimes, imperfect enforcement may increase victimization by deterring only low-ability scammers whose failed attempts would otherwise alert potential victims before encounters with high-ability scammers. High-ability scammers may actually benefit from partial enforcement, which reduces their competition. These results may be reinforced when failed attempts are punished.
Keywords: scams, deterrence, crime, enforcement
JEL Classification: K42
Suggested Citation: Suggested Citation