A case study about petty crime. A risk neutral thief will steal if the expected benefits are greater than the expected cost. The expected cost of theft (for those without a guilty conscience) equals the probability of detection multiplied by the $ punishment if caught. The expected benefits depend on what the person steals. What is the resale value of the object? How much does the thief value the object if he doesn’t sell it.
This background now allows me to tell my story. A friend of mine bought my new Yale Press Book; Adapting to Climate Change. The book was delivered to his porch in a box. A porch pirate opened the box and left my book there without taking it!
While I realize this is a small N=1 study, what inference would a structural microeconomist make here?
To end this true story, permit me to note that this is an example of how economists operate. We observe a clue about a decision maker (in this case, did he keep my book) and then we infer new information about his preferences, goals and information (does he know my book is good). I explore these themes in my one of my Amazon e-books (An Introduction to Empirical Microeconomics).
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