Ordered Leniency: An Experimental Study of Law Enforcement with Self-Reporting

Claudia Landeo and Kathryn Spier ()
Additional contact information
Kathryn Spier: Harvard Law School

No 2018-13, Working Papers from University of Alberta, Department of Economics

Abstract: This paper reports the results of an experiment designed to assess the ability of an enforcement agency to detect and deter harmful short-term activities committed by groups of injurers. With ordered-leniency policies, early cooperators receive reduced sanctions. We replicate the strategic environment described by Landeo and Spier (2018). In theory, the optimal ordered leniency policy depends on the refinement criterion applied in case of multiplicity of equilibria. Our findings are as follows. First, we provide empirical evidence of a "race-to-the-courthouse" effect of ordered leniency: Mild and Strong Leniency induce the injurers to self-report promptly. These findings suggest that the injurers' behaviors are aligned with the risk-dominance refinement. Second, Mild and Strong Leniency significantly increase the likelihood of detection of harmful activities. This fundamental finding is explained by the high self-reporting rates under ordered-leniency policies. Third, as a result of the increase in the detection rates, the averages fines are significantly higher under Mild and Strong Leniency. As expected when the risk-dominance refinement is applied, Mild Leniency exhibits the highest average fine.

Keywords: Law Enforcement; Ordered Leniency; Self-Reporting; Experiments; Leniency; Co-ordination Game; Prisoners Dilemma Game; Risk Dominance; Pareto Dominance; Equilibrium Selection; Non-Cooperative Games; Harmful Externalities; Corporate Misconduct; White-Collar Crime; Securities Fraud; Insider Trading; Market Manipulation; Whistleblowers; Plea Bargaining; Tax Evasion; Environmental Policy Enforcement (search for similar items in EconPapers)
JEL-codes: C72 C90 D86 K10 L23 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2018-09-19
New Economics Papers: this item is included in nep-cbe, nep-exp, nep-gth and nep-law
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
https://sites.ualberta.ca/~econwps/2018/wp2018-13.pdf Full text (application/pdf)

Related works:
Working Paper: Ordered Leniency: An Experimental Study of Law Enforcement with Self-Reporting (2018)
Working Paper: Ordered Leniency: An Experimental Study of Law Enforcement with Self-Reporting (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:albaec:2018_013

Access Statistics for this paper

More papers in Working Papers from University of Alberta, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Joseph Marchand ().