The Impact of Fine Size and Uncertainty on Punishment and Deterrence: Evidence from the Laboratory

40 Pages Posted: 11 Jul 2014

See all articles by Eberhard Feess

Eberhard Feess

Frankfurt School of Finance & Management gemeinn├╝tzige GmbH

Markus Schramm

RWTH Aachen University

Ansgar Wohlschlegel

Portsmouth Business School

Date Written: July 11, 2014

Abstract

Based on a simple theoretical model, we use a laboratory experiment to test the impacts of uncertainty, the magnitude of fines and aversion against making type-I and type-II errors on legal decision making. Measuring uncertainty as the noise of a signal on the defendant's guilt observed by legal decision makers, we observe that a supposed wrongdoer is less likely to be punished if fines and uncertainty are high. We find that the punishment frequency decreases considerably in fines and the signal's noise. Furthermore, judges care far more about type-I errors. Violators have social preferences, that is, they steal far less often than predicted by a model with payoff maximization. A disaggregated analysis reveals a large heterogeneity among participants who can be clustered in several different groups.

Keywords: Deterrence, fine size, type-I and type-II error, experiment

JEL Classification: C91, D03, K14

Suggested Citation

Feess, Eberhard and Schramm, Markus and Wohlschlegel, Ansgar, The Impact of Fine Size and Uncertainty on Punishment and Deterrence: Evidence from the Laboratory (July 11, 2014). Available at SSRN: https://ssrn.com/abstract=2464937 or http://dx.doi.org/10.2139/ssrn.2464937

Eberhard Feess (Contact Author)

Frankfurt School of Finance & Management gemeinn├╝tzige GmbH ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

Markus Schramm

RWTH Aachen University ( email )

Templergraben 55
52056 Aachen, 52056
Germany

Ansgar Wohlschlegel

Portsmouth Business School ( email )

Portsmouth, PO1 3DE
United Kingdom

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