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13 Rev. L & Econ. 1 (2017)

handle is hein.journals/rvleco13 and id is 1 raw text is: Stan Miles and Derek Pyne* The Economics of Scams DOI 10.1515/rle-2015-0035 Abstract: This paper offers one of the first economic analyses of scams. Its major finding is that, unlike other crimes, imperfect enforcement may increase victi- mization by deterring only low-ability scammers whose failed attempts would otherwise alert potential victims before encounters with high-ability scammers. High-ability scammers may actually benefit from partial enforcement, which reduces their competition. These results may be reinforced when failed attempts are punished. Keywords: scams, deterrence, crime, enforcement JEL Classifications: K42 I Introduction This paper analyses scams. A unique feature of scams is that once potential victims recognize one, they are less likely to be victims. If someone is approached by a scammer and becomes aware of the scam, that person will be less likely to fall for a similar scam in the future, regardless of whether the attempt of the first scammer is successful.' In other words, a potential or actual victim becomes immunized against future attempts by other scammers.2 1 It is not uncommon for potential victims to encounter similar scams multiple times. Examples include investment scams (New Brunswick Securities Commission 2010), tourist scams (Leff 2013), and Internet scams. Based on projected figures for the number of worldwide e-mail users (Radicati and Buckley 2012) and the estimated figures for the global daily spam volume that can be classified as scams (Symantec 2013), we calculate that e-mail users received an average of approximately 20 scam e-mail messages in 2012. Some of these likely involve the same types of scams. 2 To a lesser extent, victims of other criminal attempts may learn from experience. A potential victim who discovers someone attempting to steal from him may learn to take better precau- tions. However, we think this is a much stronger characteristic of scams than of other crimes. *Corresponding author: Derek Pyne, Department of Economics, Thompson Rivers University, Kamloops, British Columbia, Canada V2C OC8, E-mail: dpyne@tru.ca http://orcid.org/0000-0003-0849-0895 Stan Miles, Department of Economics, Thompson Rivers University, Kamloops, British Columbia, Canada V2C OC8 DE GRUYTER Revw Law Econ 2017; aop

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