Maybe too obvious


...to mention, but I think the only purpose of the blanket in the last scene is to subtly suggest a straitjacket.

It has the effect of emphasizing that this guy is totally crazed and dangerous.

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@golden. Norman/Mother's request for a blanket isn't in the original novel (where instead the authorial/narrator voice chimes in, ending the psychiatrist debrief chapter with an explicit 'And that was the end of it./ Or _almost_ the end.' The final chapter then begins with six sentences of narrator voice starting with: "The real end came quietly." After that it's just third person rendering of mother's musings in the cell. And there's no mention of Mother having a blanket of any kind in that last chapter.

Stefano's 'request for a blanket' is a nifty screenwriter's solution to the problem of how to naturally/logically (i.e., without using either narration or any director or camera-foregrounding flashiness, e.g., a free-floating camera of some sort going over or through walls and doors) get us from the debrief room, down the hallway, and into the cell. Note that writing 'transition solutions' like this one is one of the most important sub-skills of any screenwriter, especially an adapting screenwriter. (You study/practice this in screenwriting courses.)

Anyhow, Stefano's ingenious transition solution has consequences. He has to tell us exactly how the blanket arrives at Norman etc.. Here's the screenplay's extensive description:

The Police Guard has placed the blanket on Norman's knees.
Norman, as we come upon him, is lifting the blanket, unfolding
it. His face, although without makeup and without the
surrounding softness of the wig, has a certain femininity
about it, a softness about the mouth and a kind of arch
womanliness about the brows.

Calmly, Norman places the blanket about his shoulders, as if
it were a cashmere shawl.

Hitchcock cuts almost all of this, and I think we can guess why.

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(Cont'd) Seeing Norman assemble his old lady's cashmere shawl-like blanket and position would put him (his whole body) in motion too much. Hitchcock wants Norman/Mother as motionless as possible, to fit with the Mother's later VO about only being able to sit and stare, can't move a finger, etc., so Hitch gives us just a second of Norman's left hand pulling the top of the shawl/blanket together around him (while Norman's right hand stays hauntingly motionless and pokes boney and skeletal out of the blanket - a cool image and effect).

In sum, I don't think that your 'strait-jacket' interpretation of Norman's blanket is the main one we should be arriving at. That said, Stefano's description of the cell, i.e., before he describes the delivery of the blanket to Norman *is* suggestive and haunting:

The walls are white and plain. There is no window.

There is no furniture except the straight-back chair in which
Norman sits, in the center of the room. The room has a quality
of no-whereness, of calm separation from the world.

This is a full pre-direction of the scene that has definitely guided Hitch and his art director. The cell in the film definitely feels a little abstract and mad-house-like. Your secondary interpretation of the blanket as strait-jacket-like builds on that vibe and idea, and in that sense I'm all for it.

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That's very interesting. Yes, I had forgotten that "Mother" was wearing a shawl, and so hadn't made the connection, at least consciously.

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It paints the message crime doesn’t pay.

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