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Trust, Salience and Deterrence: Evidence from an Antitrust Experiment


Sven-Olof Fridolfsson


Research Institute of Industrial Economics (IFN)

Maria Bigoni


University of Bologna - Department of Economics

Chloe Le Coq


SITE-Stockholm School of Economics

Giancarlo Spagnolo


Stockholm School of Economics (SITE); Centre for Economic Policy Research (CEPR); University of Rome 'Tor Vergata'; EIEF

January 17, 2011

IFN Working Paper No. 859

Abstract:     
We present results from a laboratory experiment identifying the main channels through which different law enforcement strategies deter organized economic crime. The absolute level of a fine has a strong deterrence effect, even when the exogenous probability of apprehension is zero. This effect appears to be driven by distrust or fear of betrayal, as it increases significantly when the incentives to betray partners are strengthened by policies offering amnesty to “turncoat whistleblowers”. We also document a strong deterrence effect of the sum of fines paid in the past, which suggests a significant role for salience or availability heuristic in law enforcement.

Number of Pages in PDF File: 47

Keywords: Betrayal, Collusion, Corruption, Distrust, Fraud, Organized Crime, Whistleblowers

JEL Classification: C92, D03, D80, K21, K42, L41

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Date posted: January 24, 2011 ; Last revised: May 5, 2012

Suggested Citation

Fridolfsson, Sven-Olof and Bigoni, Maria and Le Coq, Chloe and Spagnolo, Giancarlo, Trust, Salience and Deterrence: Evidence from an Antitrust Experiment (January 17, 2011). IFN Working Paper No. 859. Available at SSRN: http://ssrn.com/abstract=1744852 or http://dx.doi.org/10.2139/ssrn.1744852

Contact Information

Sven-Olof Fridolfsson (Contact Author)
Research Institute of Industrial Economics (IFN) ( email )
Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden
Maria Bigoni
University of Bologna - Department of Economics ( email )
Piazza Scaravilli 2
Bologna, Bologna 40126
Italy
+390512098122 (Phone)
Chloe Le Coq
SITE-Stockholm School of Economics ( email )
PO Box 6501
Stockholm, 11383
Sweden
HOME PAGE: http://www.hhs.se/SITE/Staff/Pages/ChloeLeCoq.aspxl
Giancarlo Spagnolo
Stockholm School of Economics (SITE) ( email )
P.O. Box 6501
Stockholm
Sweden
HOME PAGE: http://https://sites.google.com/site/giancarlospagnoloshomepage/
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
University of Rome 'Tor Vergata' ( email )
Faculty of Economics - DEI
Via Columbia 2
Rome, RM 00133
Italy
EIEF ( email )
Via Due Macelli, 73
Rome, 00187
Italy
HOME PAGE: http://WWW.EIEF.IT
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