Bunching on the Autobahn? Speeding Responses to a 'Notched' Penalty Scheme

43 Pages Posted: 8 Feb 2018

See all articles by Christian Traxler

Christian Traxler

Hertie School; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; CESifo (Center for Economic Studies and Ifo Institute)

Franz Westermaier

University of Marburg

Ansgar Wohlschlegel

Portsmouth Business School

Date Written: November 21, 2017

Abstract

This paper studies drivers’ responses to a ‘notched’ penalty scheme in which speeding penalties are stepwise and discontinuously increasing in speed. We present survey evidence suggesting that drivers in Germany are well aware of the notched penalty structure. Based on a simple analytical framework we analyze the impact of the notches on drivers’ optimal speed choices. The model’s predictions are confronted with data on more than 150,000 speeding tickets from the Autobahn and 290,000 speed measures from a traffic monitoring system. The data provide evidence on modest levels of bunching, despite several frictions working against it. We analyze the normative implications and assess the scope for welfare gains from moving from a simple, notched penalty scheme to a more complex but less salient Pigouvian scheme.

Keywords: notches, speeding tickets, stepwise penalty function, salience

JEL Classification: K400, D040

Suggested Citation

Traxler, Christian and Westermaier, Franz and Wohlschlegel, Ansgar, Bunching on the Autobahn? Speeding Responses to a 'Notched' Penalty Scheme (November 21, 2017). CESifo Working Paper Series No. 6786, Available at SSRN: https://ssrn.com/abstract=3119545

Christian Traxler (Contact Author)

Hertie School ( email )

Friedrichstrasse 180
Quartier 110
Berlin, 10117
Germany

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschingerstr. 5
Munich, DE-81679
Germany

Franz Westermaier

University of Marburg ( email )

Universitätsstrasse 24
Marburg, D-35032
Germany

Ansgar Wohlschlegel

Portsmouth Business School ( email )

Portsmouth, PO1 3DE
United Kingdom

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