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Crime and moral hazard: Does more policing necessarily induce private negligence?

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  • Guha, Brishti
  • Guha, Ashok S.

Abstract

Even risk-neutral individuals can insure themselves against crimes by combining direct expenditure on security with costly diversification. In such cases — and even when one of these options is infeasible — greater policing often actually encourages private precautions.

Suggested Citation

  • Guha, Brishti & Guha, Ashok S., 2012. "Crime and moral hazard: Does more policing necessarily induce private negligence?," Economics Letters, Elsevier, vol. 115(3), pages 455-459.
  • Handle: RePEc:eee:ecolet:v:115:y:2012:i:3:p:455-459
    DOI: 10.1016/j.econlet.2011.12.105
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    References listed on IDEAS

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    7. Dick, Andrew R., 1995. "When does organized crime pay? A transaction cost analysis," International Review of Law and Economics, Elsevier, vol. 15(1), pages 25-45, January.
    8. Cameron, Samuel, 1988. "The Economics of Crime Deterrence: A Survey of Theory and Evidence," Kyklos, Wiley Blackwell, vol. 41(2), pages 301-323.
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    13. Keith N. Hylton, 1996. "Optimal Law Enforcement and Victim Precaution," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 197-206, Spring.
    14. Ehrlich, Isaac, 1981. "On the Usefulness of Controlling Individuals: An Economic Analysis of Rehabilitation, Incapacitation, and Deterrence," American Economic Review, American Economic Association, vol. 71(3), pages 307-322, June.
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    Citations

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    Cited by:

    1. Guha, Brishti, 2013. "Guns and crime revisited," Journal of Economic Behavior & Organization, Elsevier, vol. 94(C), pages 1-10.
    2. Konrad Grabiszewski & Alex Horenstein, 2017. "Product-Consumer Substitution and Safety Regulation," Working Papers 2017-01, University of Miami, Department of Economics.
    3. Konrad Grabiszewski & Alex Horenstein & Nicolo Bates, 2016. "Product-Consumer Substitution and Safety Regulation: Theory and Evidence from Simulation," Working Papers 2016-05, University of Miami, Department of Economics.

    More about this item

    Keywords

    Crime; Policing; Private precautions; Moral hazard; Diversification;

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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