9 Models of Decision Making Under Uncertainty: The Criminal Choice

Gary Becker's comment that a useful theory of criminal behavior could `... simply extend the economist's usual analysis of choice " (1968:170) marked the beginning of attempts to apply economic models of rational decision making, such as expected utility theory, to offending. Such models, in common with those of statistical decision theory, were essentially prescriptive rather than descriptive, although it was also assumed that real-life decision making would tend to accept and conform to their axioms. In the present chapter, Pamela Lattimore and Ann Witte review the theoretical and empirical shortcomings of a commonly used economic model, the expected utility model of decision making under uncertainty, and suggest that these seriously impair its adequacy as a descriptive or predictive theory of choice behavior. They then proceed to examine an alternative theory, namely, prospect theory, a descriptive model developed by Kahneman and Tversky, on the basis of empirical research into individual decision-making behavior, spe-cifically to account for those observed deviations of actual choice behavior from ones predicted by expected utility or subjective expected utility theory. Prospect theory's emphasis on the ways in which risky alternatives (or `prospects") are edited into simpler representations suggests just those sorts of information-processing activities that may well underlie aspects of the criminal decision-making activities de-scribed in part 1, where operations must be swift or deal with complex arrays of alternatives. Similarly, its discussion of the judgmental principles governing choice—notably the replacement of probabilities (objective or subjective) by decision weights, and of utilities by values assigned to changes in wealth rather than to final assets, and its treatment of attitude to risk—illustrate the potential value of increasing the responsiveness of normative economic models to questions of procedural rationality, and specifically to the results of empirical research on individual choice behaviors. Some examples of prospect theory's potential for coping with behavior not readily explicable in terms of expected utility models are given, and Lattimore and Witte end by operationalizing the two approaches, in preparation for a propose