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The Economics of Scams

Author

Listed:
  • Miles Stan

    (Department of Economics, Thompson Rivers University, Kamloops, British Columbia, Canada V2C 0C8)

  • Pyne Derek

    (Department of Economics, Thompson Rivers University, Kamloops, British Columbia, Canada V2C 0C8)

Abstract

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.

Suggested Citation

  • Miles Stan & Pyne Derek, 2017. "The Economics of Scams," Review of Law & Economics, De Gruyter, vol. 13(1), pages 1-18, March.
    • Handle: RePEc:bpj:rlecon:v:13:y:2017:i:1:p:18:n:5
    DOI: 10.1515/rle-2015-0035
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    References listed on IDEAS

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    10. Stan Miles & Derek Pyne, 2015. "Deterring repeat offenders with escalating penalty schedules: a Bayesian approach," Economics of Governance, Springer, vol. 16(3), pages 229-250, August.
    11. Friehe, Tim, 2013. "Tempting righteous citizens? Counterintuitive effects of increasing sanctions in the realm of organized crime," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 44(C), pages 37-40.
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    Cited by:

    1. Christian Leuz & Steffen Meyer & Maximilian Muhn & Eugene Soltes & Andreas Hackethal, 2017. "Who Falls Prey to the Wolf of Wall Street? Investor Participation in Market Manipulation," NBER Working Papers 24083, National Bureau of Economic Research, Inc.
    2. Anton Pashkevich & Andrzej Szarata & Tomasz E. Burghardt & Rafał Jaremski & Matúš Šucha, 2021. "Operation of Public Transportation Ticket Vending Machine in Kraków, Poland: An Eye Tracking Study," Sustainability, MDPI, vol. 13(14), pages 1-15, July.
    3. Daniel J. Benjamin & Ori Heffetz & Miles S. Kimball & Alex Rees-Jones, 2010. "Do People Seek to Maximize Happiness? Evidence from New Surveys," NBER Working Papers 16489, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    scams; deterrence; crime; enforcement;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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