Deputization

53 Pages Posted: 26 May 2020 Last revised: 23 May 2021

See all articles by Bruce Carlin

Bruce Carlin

Rice University

Tarik Umar

Rice University

Hanyi (Livia) Yi

Boston College - Carroll School of Management

Date Written: May 2020

Abstract

A policy of deputization asks agents to monitor others without providing explicit incentives. It is often used to prevent dangerous activities. To calibrate whether and why it works, we study recent laws that deputized financial professionals to help fight elder financial abuse. We show deputization led to a 4%-6% decrease in suspected cases and a 4.5% drop in personal bankruptcies. Women, minorities, and unmarried people benefited more. Effectiveness operated through higher community-mindedness and deeper social connections. Egoistic incentives, legal concerns, publicity, and religiosity were less important. This suggests that regulators can rely on social networks to solve tough problems.

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Suggested Citation

Carlin, Bruce and Umar, Tarik and Yi, Hanyi, Deputization (May 2020). NBER Working Paper No. w27225, Available at SSRN: https://ssrn.com/abstract=3609678

Bruce Carlin (Contact Author)

Rice University ( email )

6100 South Main Street
Houston, TX 77005-1892
United States

Tarik Umar

Rice University ( email )

Houston, TX
United States

HOME PAGE: http://https://business.rice.edu/person/tarik-umar

Hanyi Yi

Boston College - Carroll School of Management ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

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