We re-examine the efficiency of observable and unobservable crime protection decisions with new results and insights. Observable protection is unambiguously associated with a negative externality. At the individual level, it reduces the crime effort, but its unit payoff remains unchanged. Conversely, unobservable protection reduces the unit payoff and has no effect on the crime effort exerted, though it deters crime globally. A decrease in the global crime payoff is detrimental to a victim if protection is observable, while it is beneficial when unobservable. While observable protection has a positive diversion effect, it has the opposite effect when unobservable.
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Find related papers by JEL classification: D62 - Microeconomics - - Welfare Economics - - - Externalities D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law