Penalties and Learning in an Auditing Game: An Experimental Investigation

Posted: 9 May 1997

See all articles by Rachel Schwartz

Rachel Schwartz

affiliation not provided to SSRN

Ronald R. King

Washington University in St. Louis - John M. Olin Business School

Date Written: February 1997

Abstract

In this paper we report the results of an experiment designed to compare learning dynamics in an auditing game under four different legal regimes. The central focus of this study is on the effects that financial penalties have on subjects decision-making. Although the role of financial penalties is critical in influencing the actions of agents in legal regimes, prior experimental research has not investigated the extent to which penalties have the intended influence on agents. Our results indicate that the traditional learning model does not apply to the learning of legal regimes unless penalties are explicitly introduced to the learning model.

JEL Classification: M40, M49, C91

Suggested Citation

Schwartz, Rachel and King, Ronald R., Penalties and Learning in an Auditing Game: An Experimental Investigation (February 1997). Available at SSRN: https://ssrn.com/abstract=2961

Rachel Schwartz

affiliation not provided to SSRN

Ronald R. King (Contact Author)

Washington University in St. Louis - John M. Olin Business School ( email )

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