Penalty Structures and Deterrence in a Two-Stage Model: Experimental Evidence

46 Pages Posted: 24 Apr 2015

See all articles by Lisa R. Anderson

Lisa R. Anderson

College of William and Mary - Department of Economics

Gregory J. DeAngelo

Claremont Colleges - Claremont Graduate University

Winand Emons

University of Bern - Department of Economics; Centre for Economic Policy Research (CEPR)

Beth Freeborn

Government of the United States of America - Federal Trade Commission

Hannes Lang

Rensselaer Polytechnic Institute (RPI)

Multiple version iconThere are 3 versions of this paper

Date Written: April 22, 2015

Abstract

Increasing penalty structures for repeat offenses are ubiquitous in penal codes, despite little empirical or theoretical support. Multi-period models of criminal enforcement based on the standard economic approach of Becker (1968) generally find that the optimal penalty structure is either flat or declining. We experimentally test a two-stage theoretical model that predicts decreasing penalty structures will yield greater deterrence than increasing penalty structures. We find that decreasing fine structures are more effective at reducing risky behavior. Additionally, our econometric analyses reveal a number of behavioral findings. Subjects are deterred by past convictions, even though the probability of detection is independent across decisions. Further, subjects appear to take the two-stage nature of the decision making task into account, suggesting that subjects consider both current and future penalties. Even controlling for the fine a subject faces for any given decision, being in a decreasing fine structure has a significant effect on deterrence.

Keywords: repeat offenders, increasing penalties, experimental evidence

JEL Classification: C91, K42, K10

Suggested Citation

Anderson, Lisa R. and DeAngelo, Gregory Joseph and Emons, Winand and Freeborn, Beth and Lang, Hannes, Penalty Structures and Deterrence in a Two-Stage Model: Experimental Evidence (April 22, 2015). Available at SSRN: https://ssrn.com/abstract=2597609 or http://dx.doi.org/10.2139/ssrn.2597609

Lisa R. Anderson

College of William and Mary - Department of Economics ( email )

Williamsburg, VA 23187-8795
United States

Gregory Joseph DeAngelo (Contact Author)

Claremont Colleges - Claremont Graduate University ( email )

150 E. Tenth Street
Claremont, CA 91711
United States

Winand Emons

University of Bern - Department of Economics ( email )

Schanzeneckstrasse 1
Postfach 8573
CH-3001 Bern
Switzerland
+41 31 631 3922 (Phone)
+41 31 631 3783 (Fax)

HOME PAGE: http://staff.vwi.unibe.ch/emons

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Beth Freeborn

Government of the United States of America - Federal Trade Commission ( email )

600 Pennsylvania Ave., NW
Washington, DC 20580
United States

Hannes Lang

Rensselaer Polytechnic Institute (RPI) ( email )

Troy, NY 12180
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
43
Abstract Views
496
PlumX Metrics