Econ 143 Paper 1

The primary question of this article is based upon the question of what is more useful for deterring crime - Econ 143 Paper 1 introduction. Is it a harsher sentence or a greater chance to be caught? There have been multiple papers on this topic, but most of the results have been inconclusive. Therefore, the researcher would like to shed more light upon human decision making in regards to deterring crime. The key benefits of this research would include providing valuable data on how to prevent crime using limited resources. Would it be better to spend more money on punishing a crime, or to spend more money on things such as inspection or law enforcement in order to catch more people committing crimes? This is a very interesting question because crime takes a large toll on national and state governments. Additionally, the decrease of crime would be extremely beneficial for society. Finally, this question tries to find a way to uncover the mystery that is human decision making. Experimental Design

The researchers utilized two different experiments with multiple parts in order to obtain the data needed to provide conclusive results. The first part involved a lottery from 10 different choices. Participants would choose between option A and option B for 10 different times, which would represent payoffs dependent on the results of a 10-sided dice. For example, Option A is payout of $1.50 if 1-9 is rolled or Option B where there is a payout of $10 if a 10 is rolled. Then the participant would have to pick between option A or B receiving 0 if the other option is rolled. This is used to obtain an idea of how risk averse or loving each participant was. Which of the 10 options would be chosen was based on the first of two dice rolls, it would tell which numbered choice would be picked, while the second dice roll would be the deciding factor of the payout.

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In the second part of the experiment, the utilized 30 periods in order to test each participant’s reactions to conforming or not. Compliance costs a certain amount of money, while at the same time not complying while being caught will also require money, but if you do not comply and are not caught there will be no charge. These values ranged from 4-14$ for compliance, 4-20$ for the fine, and inspection probability from 0-1 in increments of .1 in the different periods. All of this information was made available to the participant in order to try to see their reactions to each situation. The payout was decided by a lottery ball that would randomly be selected from a pool of 30 balls, which would decide which period would be paid out.

The pool of participants involved 139 college students, which were spread over the course of eight different sessions. Half of the participants were female, and a majority was freshman or sophomores in college. And all participants went through both parts of the experiments getting paid for a culmination of the two experiments as well as a 5 dollar participation fee. Empirical Findings

From the results seen in the experiment, it is seen that there is a high amount of evidence towards the use of harsher punishment is more effective than being more likely to get caught. This data observed showed that most of the participants were risk adverse (83%), 13% were risk neutral and the rest were risk loving. Additionally, the data shows that females are much more risk adverse in comparison to males, and there was a high positive relation between the safe choice in part 1 of the experiment to compliance in the second experiment. This shows that subjects that were risk averse were more likely to comply. Utilizing this information one is able to see that from the empirical evidence that it is more efficient use of money to increase the severity of punishment to deter crime, rather than to increase the risk of getting caught. Therefore, regulators with budget restrictions can effectively use funds to benefit the community.

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