What is the payoff to an individual choosing to be criminal

Assignment Help Business Economics

Reference no: EM13840151

Consider a neighbourhood with 1000 residents. Each individual must choose (let’s assume simultaneously) whether to be a criminal or not. If an individual chooses to attempt a criminal act, their payoff is 200 if they succeed, but -300 if they are caught by the police. Whether or not they are caught, of course, depends on how many people choose to be criminals.

Let m represent the number of citizens who choose to to be criminals. With criminals out on the loose, the chance of any one criminal getting caught is 1/m. The chance of not getting caught is therefore m-1/m. The (expected) payoff to an individual who chooses a life of crime is therefore

(m-1/ m) 200 - (1/m) 300.

The payoff who to an ordinary individual who chooses not to engage in crime is 100.

-Is this game symmetric? Why or why not?

-What is the payoff to an individual choosing to be a criminal if m = 500? (Assume that m includes the individual whose payoff you’re calculating.) Also, what is the payoff to an ordinary individual who chooses not to engage in crime when m=500?

Reference no: EM13840151

Questions Cloud

Existing-potential entrants face decreasing industry costs : If all firms, existing and potential new entrants face decreasing industry costs in the long run under perfect competition, the industry supply curve will:

Calculate the market price of the bond : A $10,000 par value bond with coupons at 8%, convertible semi annually, is being sold three years and four months before the bond matures. The bond is redeemable at $C, and purchase will yield 6% convertible semi annually to the buyer. The price of t..

Monetary base and the level of reserves : Explain and illustrate graphically the effect of the following on the monetary base and the level of reserves. The Fed lends the Bank of America additional $20 million but depositors withdraw $5million. Central bank purchases $30 million of governmen..

Is the bank rate sensitivity gap positive or negative : Suppose you are the manager of the bank that has $15 million of fixed-rate assets, $30 million of interest rate- sensitive assets, $20 million of rate-fixed liabilities and $20 million of interest rate -sensitive liabilities. Is the bank rate sensiti..

What is the payoff to an individual choosing to be criminal : Consider a neighbourhood with 1000 residents. Each individual must choose (let’s assume simultaneously) whether to be a criminal or not. If an individual chooses to attempt a criminal act, their payoff is 200 if they succeed, but -300 if they are cau..

About the solow growth model : After reading about the Solow growth model, which concludes that continued economic growth requires continual innovation, and Schumpeter’s dynamic growth model, does the combination of these two models provide an adequate model of technological chang..

How much would another investor willing to pay for security : uppose that the two years have elapsed since you purchased the security, and you have received the first two payments of $600 each. Now suppose the market interest rate suddenly jumps to 10%. How much would another investor be willing to pay for your..

Firm in perfectly competitive market will produce no output : A firm in a perfectly competitive market will produce no output in the short run if the price is below $20 but will produce if the price is above $20. The smallest quantity they will produce in the short run is 6. Firms will earn 0 economic profits i..

User Account

All Pages