The Impact of Heterogeneity on the Optimal Self-Reporting Scheme

12 Pages Posted: 7 Oct 2002

See all articles by Markus Walzl

Markus Walzl

RWTH Aachen University - Chair for Economics (Microeconomics)

Eberhard Feess

Frankfurt School of Finance & Management gemeinn├╝tzige GmbH

Date Written: August 2002

Abstract

We consider a model of optimal law enforcement where sanctions can be reduced for self-reporting individuals. After having committed a crime, individuals get private information on their probabilities of apprehension. This leads to an option value of self-reporting, since criminals can decide whether to come forward or not after they have learned their types. We show that the optimal fine reduction is strictly decreasing in the heterogeneity of the criminals' types. This result is important when designing self-reporting schemes in reality.

Keywords: self-reporting, tax amnesties, optimal law enforcement, ex post asymmetric information

JEL Classification: D62, D82, H50, K42

Suggested Citation

Walzl, Markus and Feess, Eberhard, The Impact of Heterogeneity on the Optimal Self-Reporting Scheme (August 2002). Available at SSRN: https://ssrn.com/abstract=322463 or http://dx.doi.org/10.2139/ssrn.322463

Markus Walzl (Contact Author)

RWTH Aachen University - Chair for Economics (Microeconomics) ( email )

Aachen, 52056
Germany
0049 241 809 6157 (Phone)
0049 241 809 2345 (Fax)

Eberhard Feess

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

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

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