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

35 Pages Posted: 28 Aug 2017

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: October 2017

Abstract

Multiperiod 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 present the first experimental test of a two‐stage theoretical model that predicts decreasing penalty structures will yield greater deterrence than increasing penalty structures. This prediction is based on the belief that if the penalty for the first offenses is sufficiently low, the agent should commit the offense and continue to offend if undetected. Our results are consistent with the theoretical prediction that decreasing fine structures are more effective at reducing risky behavior.

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 (October 2017). Economic Inquiry, Vol. 55, Issue 4, pp. 1833-1867, 2017, Available at SSRN: https://ssrn.com/abstract=3026799 or http://dx.doi.org/10.1111/ecin.12464

Lisa R. Anderson (Contact Author)

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

Williamsburg, VA 23187-8795
United States

Gregory Joseph DeAngelo

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

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