Crime and economics: Game Theory approach

The main subject of our thesis is to clarify the possibilities and limits of the game theory on crime deterrence. Different disciplines like sogiology, biology, psychology, economics, anthropology and law have contributed to the field of criminology. Criminological theories may be classified under two main categories as deterrence theories and explanatory theories for crime causation. Crime causation theories concentrate on criminals while the focal point of deterrence theories is crime deterrence. Classical criminology, rational choice theory and game theory take place in this category. In this study, inductive method has been followed and the research has been done by reviewing related literature. In economics, the first study in this scope is the article by Becker (1968) titled as Crime and Punishment: An Economic Approach written within the frame of rational choice approach. Becker following the main ideas of Classical criminology argued that; an individual is rational, calculates the expected utilities and costs of his choice under uncertainity and if benefits are more, he commits to crime, otherwise he deters. In order to deter the individual from criminal activity, penalties should be severe, certain, immediate and also proportional to crime. Becker unlike Bentham recognized that crime can not be reduced to zero. In Literature the first economic analysis through the game theoretic approach is Allingham and Sandmo (1972)'s article; Income Tax Evasion: A Theoretical Analysis. Allingham ve Sandmo (A&S) extended the expected utility model of criminal activity originated by Becker (1968) to the tax sphere. Here, individual taxpayer's decision on income tax evasion is regarded as a portfolio decision under uncertainity and depends on utility maximization; probability of detection and punishment play as the deterrent role. The assumptions of Becker and A&S model have been examined and tested both theoretically and experimentally by different disciplines like sogiology, economics, behavioral economics and evolutionary game theory. Theoretical and experimental literature in the scope of economics have concentrated on income tax evasion, the results of the experiments attribute strong support for the assumptions that tax compliance depends upon enforcement. On the other hand, the model has been criticized from theoretical aspect for being very simple and besides this, twenty more critiques have been considered as other factors not mentioned in the basic A&S model affecting the compliance decision most of them are none economic factors and moral values. As to experiments from behavioral economics and evolutionary game theory, part of the results are contradictory with the assumptions of Becker (1968) and A&S (1972). Under the second chapter of the fourth part of our thesis, some selected experimental and quasi - experimental researches conducted within the frame of Becker and A&S models have been investigated to compare crime deterrent effects of certainity, severity and celerity seperately. The evidence of existing researches suggest that as the ideas of Bentham and Beccaria, the certainity of the punishment strongly supports the deterrent effect, while deterrent effect of severity remains moderate or unimportant. Confirmation studies about celerity factor are few. Under the light of evidence presented in the studies reviewed in our thesis, when evaluated together, it is concluded that game theory is an effective tool for explaining crime deterrence. Key Words: Crime, Criminology, Deterrence, Rational Choice Theory, Game Theory