Slippery Fish: Enforcing Regulation Under Subversive Adaptation

67 Pages Posted: 21 May 2019

See all articles by Andres Gonzalez Lira

Andres Gonzalez Lira

University of California, Berkeley

Ahmed Mushfiq Mobarak

Yale School of Management; Yale University - Cowles Foundation

Abstract

Attempts to curb illegal activity through regulation gets complicated when agents can adapt to circumvent enforcement. Economic theory suggests that conducting audits on a predictable schedule, and (counter-intuitively) at high frequency, can undermine the effectiveness of audits. We conduct a large-scale randomized controlled trial to test these ideas by auditing Chilean vendors selling illegal fish. Vendors circumvent penalties through hidden sales and other means, which we track using mystery shoppers. Instituting monitoring visits on an unpredictable schedule is more effective at reducing illegal sales.High frequency monitoring to prevent displacement across weekdays to other markets backfires, because targeted agents learn faster and cheat more effectively. Sophisticated policy design is therefore crucial for determining the sustained, longer-term effects of enforcement. A simpler demand-side information campaign generates two-thirds of the gains compared to the most effective monitoring scheme, it is easier for the government to implement, and is almost as cost-effective. The government subsequently chose to scale up that simpler strategy.

Keywords: enforcement, regulation, law and economics, fisheries

JEL Classification: K42, O1, L51

Suggested Citation

Gonzalez Lira, Andres and Mobarak, Ahmed Mushfiq, Slippery Fish: Enforcing Regulation Under Subversive Adaptation. IZA Discussion Paper No. 12179. Available at SSRN: https://ssrn.com/abstract=3390166

Andres Gonzalez Lira (Contact Author)

University of California, Berkeley ( email )

310 Barrows Hall
Berkeley, CA 94720
United States

Ahmed Mushfiq Mobarak

Yale School of Management ( email )

135 Prospect Street
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-5787 (Phone)

HOME PAGE: http://mba.yale.edu/faculty/profiles/mobarak.shtml

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
5
Abstract Views
77
PlumX Metrics