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A rational actor would be twice as deterred if you kept the risk of punishment the same and doubled the severity. But actual people don't respond that way. The
by ianferrel 12y ago
A rational actor would be twice as deterred if you kept the risk of punishment the same and doubled the severity.
But actual people don't respond that way. They respond to the risk rather than the expected punishment.
- baddox 12y agoYou'd probably need to define and use "marginal severity," which unfortunately probably ends up being subjective and difficult to analyze.
- droopyEyelids 12y agoThe problem with this is everyone's definition of Rational Actor is arbitrary in what incentives it excludes or includes. Talking about what a Rational Actor would do makes about as much sense as claiming your opinion is fully objective.
- baddox 12y agoIn my opinion, the version of rationality that has the most relevance to economic analysis (and should really be the primary definition of the term in economics) is bounded rationality. http://en.wikipedia.org/wiki/Bounded_rationality http://en.wikipedia.org/wiki/Bounded_rationality