Deputization

Bruce I. Carlin, Tarik Umar and Hanyi Yi

No 27225, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: G28 H31 K23 (search for similar items in EconPapers)
Date: 2020-05
Note: AG CF LE PE POL
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