PENALTY STRUCTURES AND DETERRENCE IN A TWO‐STAGE MODEL: EXPERIMENTAL EVIDENCE |
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| Authors: | Lisa R. Anderson Gregory DeAngelo Winand Emons Beth Freeborn Hannes Lang |
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| Affiliation: | 1. 757-221-2359757-221-1175;2. Professor, Department of Economics, 127 Morton Hall, College of William and Mary, Williamsburg, VA;3. 304-293-4039;4. Assistant Professor of Economics, College of Business and Economics, West Virginia University, 1601 University Avenue, Morgantown, WV;5. +41 31 631 39 22;6. Professor, Department of Economics, University of Bern, Hochschulstrasse 4, 3012 Bern, Switzerland;7. 202-326-2837;8. Economist, Federal Trade Commission, 600 Pennsylvania Avenue, NW Washington, DC |
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| 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 C91, K42, K10) |
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