Answer in Microeconomics for Bubblys #174194
People who commit bank robberies must make the decision to rob banks. That decision comes with a built-in dilemma: every minute a robber stays in the bank increases the amount of money the robber will get, but every minute in the bank also increases the likelihood that the robber will get caught.
A study of more than 5000 bank robberies between 2005 and 2007 found that the average bank robbery lasted 4 minutes and 16 seconds and yielded about $20,000. The study also found that each additional minute that robbers spent in the bank increased their haul by about $2,000.
Explain how an economically rational bank robber should determine how many minutes to spend in the bank committing the robbery. Be sure to explain the principle that a rational bank robber would apply to this decision, and how that principle would be applied.
An economically rational bank robber would use probabilities of being caught in determining possible yield and the total possible outcomes of the robbery depending on how many minutes to spend in the bank committing the robbery. He would choose some optimal point, at which the probability of getting caught is not very high, and the total yield is as high as possible.