Question
Imagine Mother Goose is deciding whether or not to steal something from a grocery store at time t. Let's assume that Mother Goose knows the
Imagine Mother Goose is deciding whether or not to steal something from a grocery store at time t. Let's assume that Mother Goose knows the probability she will get caught is p and the probably that she will not get caught is 1 p. If she doesn't get caught, she gets 10 utils at time t and 0 utils at time t+1. If she does get caught, she gets 0 utils at time t and -x utils at time t+1 as a punishment. Answer the following:
a Assume that Mother Goose is an exponential discounter with = .95. Solve for what values of x Mother Goose will shoplift (according to a standard Becker model of criminal behavior).
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