This paper develops a theory of crime in which potential victims elect their vigilance levels. When vigilance expenses are greater than expected property losses, an increase in penalties raises crime, namely, a criminal Laffer curve emerges. This curve is higher and peaks earlier when victims face higher costs. Thus, the government may wish to subsidize vigilance rather than increase penalties. Indeed, an increase in penalties may shift the vigilance levels further away from their socially optimal ones. Finally, the crime rate first rises and then falls in the property value at stake, which is consistent with the empirical evidence.
"A Theory of Crime and Vigilance."
American Economic Journal: Microeconomics,
Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
State and Local Government: Other Expenditure Categories
Illegal Behavior and the Enforcement of Law