Criminals and Risk Attitude
10 Pages Posted: 12 May 2006
Date Written: November 24, 2006
We show that whatever the representation of criminals' preferences under risk, the assumption according to which they are strongly risk averse individuals is not consistent with the available observations establishing that criminals are more sensitive to shifts in the probability of sanction than to changes in the level of the sanction. We suggest that: 1) while a weakening of the risk aversion assumption may be useful, the risk seeking assumption may be better suited for criminals; 2) the relevant assumption regarding criminals' risk attitude may depend on the policy instruments that models of crime deterrence take into account; 3) additional experiments including both monetary and non monetary sanction would be useful in order to learn more about their sensitivity to probability, monetary and non monetary sanctions.
Keywords: Risk aversion, monetary and non monetary sanctions, State dependent preferences
JEL Classification: D81, K42
Suggested Citation: Suggested Citation