ABSTRACT
This chapter reviews the theoretical and empirical shortcomings of a commonly used economic model, the expected utility model of decision making under uncertainty, and suggests that these seriously impair its adequacy as a descriptive or predictive theory of choice behavior. It examines the expected utility model of decision making in risky situations, such as the criminal choice, and an alternative to this model that is based on prospect theory, suggested by D. Kahneman and A. Tversky. The chapter describes the expected utility model that has been the base for economic models of criminal behavior. This model has been widely used to study decision making in risky situations ranging from investment decisions to gambling and insurance. The chapter discusses prospect theory and contrast it with the expected utility model. Theoretical models of decision making under uncertainty are applied to criminal choice in an effort to determine the variables that can be manipulated by criminal justice agencies to reduce criminal activity.
