Models of decision making under uncertainty: the criminal choice
08 Sep 2017-pp 129-155
TL;DR: In this paper, the theoretical and empirical shortcomings of a commonly used economic model, the expected utility model of decision making under uncertainty, and suggests that these seriously impair its adequacy as a descriptive or predictive theory of choice behavior.
Abstract: This chapter reviews the theoretical and empirical shortcomings of a commonly used economic model, the expected utility model of decision making under uncertainty, and suggests that these seriously impair its adequacy as a descriptive or predictive theory of choice behavior. It examines the expected utility model of decision making in risky situations, such as the criminal choice, and an alternative to this model that is based on prospect theory, suggested by D. Kahneman and A. Tversky. The chapter describes the expected utility model that has been the base for economic models of criminal behavior. This model has been widely used to study decision making in risky situations ranging from investment decisions to gambling and insurance. The chapter discusses prospect theory and contrast it with the expected utility model. Theoretical models of decision making under uncertainty are applied to criminal choice in an effort to determine the variables that can be manipulated by criminal justice agencies to reduce criminal activity.
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TL;DR: In this paper, a summary of the rational choice approach and its implications for the study of criminal behavior is presented, along with a review of research on offending that uses the Rational Choice approach in conjunction with more sociological orientations.
Abstract: ▪ Abstract This paper begins with a summary of the rational choice approach and its implications for the study of criminal behavior. I then review research on offending that uses the rational choice approach in conjunction with more sociological orientations. I also summarize research on game theory and demonstrate how it can be effectively used to understand and predict criminal decision-making. I argue that, contrary to the assessment of many criminologists, rational choice approach and game theory insights can be combined profitably with sociological perspectives to advance the understanding and prediction of criminal behavior.
245 citations
TL;DR: A survey of empirical research concerning the determinants of an individual's perceptions of the risk of formal sanctions as a consequence of criminal behavior can be found in this article, where the specific questions considered are: (1) How accurate is people's knowledge about criminal sanctions? (2) How do people acquire and modify their subjective probabilities of punishment risk? (3) How how do individuals act on their risk perceptions in specific criminal contexts?
Abstract: A survey of empirical research concerning the determinants of an individual’s perceptions of the risk of formal sanctions as a consequence of criminal behavior. The specific questions considered are: (1) How accurate is people’s knowledge about criminal sanctions? (2) How do people acquire and modify their subjective probabilities of punishment risk? (3) How do individuals act on their risk perceptions in specific criminal contexts? Three broad classes of extant studies are reviewed. The first is the relationship between objective sanctions, sanction enforcement, and risk perceptions—research that includes calibration studies and correlational studies. The second is the relationship between punishment experiences (personal and vicarious) and change in risk perceptions, in particular, research that relies on formal models of Bayesian learning. The third is the responsiveness of would-be offenders to immediate environmental cues—a varied empirical tradition that encompasses vignette research, offender interviews, process tracing, and laboratory studies. First, research concerning the accuracy of risk perceptions suggests that the average citizen does a reasonable job of knowing what criminal penalties are statutorily allowed, but does a quite poor job of estimating the probability and magnitude of the penalties. On the other hand, studies which inquire about more common offenses (alcohol and marijuana use) from more crime-prone populations (young people, offenders) reveal that perceptions are consistently better calibrated to actual punishments. Second, research on perceptual updating indicates that personal experiences and, to a lesser degree, vicarious experiences with crime and punishment are salient determinants of changes in risk perceptions. Specifically, individuals who commit crime and successfully avoid arrest tend to lower their subjective probability of apprehension. Third, research on the situational context of crime decision making reveals that risk perceptions are highly malleable to proximal influences which include, but are not limited to, objective sanction risk. Situational risk perceptions appear to be particularly strongly influenced by substance use, peer presence, and arousal level. The perceptual deterrence tradition is theoretically rich, and has been renewed in the last decade by creative empirical tests from a variety of social scientific disciplines. Many knowledge gaps and limitations remain, and ensuing research should assign high priority to such considerations as sampling strategies and the measurement of risk perceptions.
226 citations
TL;DR: In this paper, a rational choice model of crime and delinquency is proposed, which assumes that crime is the product of imperfectly informed choice and that decisions to offend are made, assessed, and remade.
Abstract: Empirical tests of the deterrence doctrine have suffered from two deficiencies: they have rarely been conducted within the context of a more general theory of social control, and they have confounded the effects of sanction threats on different kinds of offending decisions. This chapter includes deterrence variables into a rational choice model of common delinquent offending. The rational choice perspective presumes that crime and delinquency are the products of imperfectly informed choice and that decisions to offend are made, assessed, and remade. Deterrence research conducted at the ecological level has utilized implicit models of human action similar to the expected utility theory of economics. The chapter illustrates the deterrence/rational choice model of offending for common delinquent offenses and the kinds of offending decisions that are typically made during a "career." The dependent variables in the participation models are the respondents' self-reported involvement in four common delinquent offenses: marijuana use, drinking liquor under age, petty theft, and vandalism.
214 citations
TL;DR: In this paper, auteur remet en question la validite de l'approche du DSM III-R a propos des maladies mentales simulees, and propose un nouveau regard sur le sujet: le modele adaptationnel.
Abstract: L'auteur remet en question la validite de l'approche du DSM III-R a propos des maladies mentales simulees, et propose un nouveau regard sur le sujet: le modele adaptationnel
127 citations
TL;DR: In this paper, the authors assess the relevance of behavioral analysis for the theory of optimal law enforcement and conclude that behavioral analysis has a role to play in criminal law and that the results so far provided by the behavioral approach are somehow disappointing.
Abstract: Behavioral economic analysis of law is about bringing recent research about behavior and choice together with classical law and economics. In this essay we assess its relevance for the theory of optimal law enforcement. It is our view that criminal law is an area where behavioral analysis has a role to play. Notwithstanding the results so far provided by the behavioral approach are somehow disappointing.
92 citations
References
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TL;DR: In this paper, the authors present a critique of expected utility theory as a descriptive model of decision making under risk, and develop an alternative model, called prospect theory, in which value is assigned to gains and losses rather than to final assets and in which probabilities are replaced by decision weights.
Abstract: This paper presents a critique of expected utility theory as a descriptive model of decision making under risk, and develops an alternative model, called prospect theory. Choices among risky prospects exhibit several pervasive effects that are inconsistent with the basic tenets of utility theory. In particular, people underweight outcomes that are merely probable in comparison with outcomes that are obtained with certainty. This tendency, called the certainty effect, contributes to risk aversion in choices involving sure gains and to risk seeking in choices involving sure losses. In addition, people generally discard components that are shared by all prospects under consideration. This tendency, called the isolation effect, leads to inconsistent preferences when the same choice is presented in different forms. An alternative theory of choice is developed, in which value is assigned to gains and losses rather than to final assets and in which probabilities are replaced by decision weights. The value function is normally concave for gains, commonly convex for losses, and is generally steeper for losses than for gains. Decision weights are generally lower than the corresponding probabilities, except in the range of low prob- abilities. Overweighting of low probabilities may contribute to the attractiveness of both insurance and gambling. EXPECTED UTILITY THEORY has dominated the analysis of decision making under risk. It has been generally accepted as a normative model of rational choice (24), and widely applied as a descriptive model of economic behavior, e.g. (15, 4). Thus, it is assumed that all reasonable people would wish to obey the axioms of the theory (47, 36), and that most people actually do, most of the time. The present paper describes several classes of choice problems in which preferences systematically violate the axioms of expected utility theory. In the light of these observations we argue that utility theory, as it is commonly interpreted and applied, is not an adequate descriptive model and we propose an alternative account of choice under risk. 2. CRITIQUE
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Book•
01 Jan 1944
TL;DR: Theory of games and economic behavior as mentioned in this paper is the classic work upon which modern-day game theory is based, and it has been widely used to analyze a host of real-world phenomena from arms races to optimal policy choices of presidential candidates, from vaccination policy to major league baseball salary negotiations.
Abstract: This is the classic work upon which modern-day game theory is based. What began more than sixty years ago as a modest proposal that a mathematician and an economist write a short paper together blossomed, in 1944, when Princeton University Press published "Theory of Games and Economic Behavior." In it, John von Neumann and Oskar Morgenstern conceived a groundbreaking mathematical theory of economic and social organization, based on a theory of games of strategy. Not only would this revolutionize economics, but the entirely new field of scientific inquiry it yielded--game theory--has since been widely used to analyze a host of real-world phenomena from arms races to optimal policy choices of presidential candidates, from vaccination policy to major league baseball salary negotiations. And it is today established throughout both the social sciences and a wide range of other sciences.
19,337 citations
Book•
01 Jan 1921
TL;DR: In Risk, Uncertainty and Profit, Frank Knight explored the riddle of profitability in a competitive market profit should not be possible under competitive conditions, as the entry of new entrepreneurs would drive prices down and nullify margins, however evidence abounds of competitive yet profitable markets as mentioned in this paper.
Abstract: In Risk, Uncertainty and Profit, Frank Knight explored the riddle of profitability in a competitive market profit should not be possible under competitive conditions, as the entry of new entrepreneurs would drive prices down and nullify margins, however evidence abounds of competitive yet profitable markets. To explain this seeming paradox, Knight uncovers the distinction between calculable risk and essentially unknowable uncertainty. Knight argued that risk stems from repeated events, which therefore allow probabilities to be calculated and factored into decisions, as for instance insurers do. Uncertainty however, stems from events that are unpredictable and as such cannot be prepared against. According to Knight, it is the interplay between risk and uncertainty on the one hand and competition between incumbent and new entrepreneurs that accounts for the enormous variation in profitability across firms and, for the same firms, over time. His insights on the sources of profit have been instrumental in shaping modern economic theory and to the development of a useful understanding of probability. This New Edition has been typeset with modern techniques and contains a newly compiled Index of important topics. It has been painstakingly proofread to ensure that it is free from errors and that the content is faithful to the original.
10,309 citations
TL;DR: In fact, some common properties are shared by practically all legislation, and these properties form the subject matter of this essay as discussed by the authors, which is the basis for this essay. But, in spite of such diversity, some commonsense properties are not shared.
Abstract: Since the turn of the twentieth century, legislation in Western countries has expanded rapidly to reverse the brief dominance of laissez faire during the nineteenth century. The state no longer merely protects against violations of person and property through murder, rape, or burglary but also restricts ‘discrimination’ against certain minorities, collusive business arrangements, ‘jaywalking’, travel, the materials used in construction, and thousands of other activities. The activities restricted not only are numerous but also range widely, affecting persons in very different pursuits and of diverse social backgrounds, education levels, ages, races, etc. Moreover, the likelihood that an offender will be discovered and convicted and the nature and extent of punishments differ greatly from person to person and activity to activity. Yet, in spite of such diversity, some common properties are shared by practically all legislation, and these properties form the subject matter of this essay.
9,613 citations