The impact of fine size and uncertainty on punishment and deterrence: Theory and evidence from the laboratory

Eberhard Feess (), Hannah Schildberg-Hörisch, Markus Schramm and Ansgar Wohlschlegel
Authors registered in the RePEc Author Service: Hannah Schildberg-Hoerisch ()

Journal of Economic Behavior & Organization, 2018, vol. 149, issue C, 58-73

Abstract: Increasing punishment is typically considered first choice to boost deterrence of unwarranted behavior such as false financial statements, asset misappropriation, stealing, or corruption. However, if there is uncertainty on a potential violator’s guilt, judges’ and juries’ willingness to impose punishment may decrease in its magnitude. Thus, increasing the magnitude of punishment may backfire, when the reduced punishment probability is anticipated by potential violators. Based on a theoretical model, our paper is the first to analyze the interdependency of violation and punishment behavior in a laboratory experiment, and to contrast it to the standard partial equilibrium perspective on deterrence that considers the punishment probability to be independent of the fine size. Varying both the magnitude of fines and the degree of uncertainty shows that, in case of legal uncertainty, the deterrent effect of higher fines is far less pronounced than if the punishment probability was exogenous.

Keywords: Deterrence; Punishment; Uncertainty; Blackstone ratio; Partial and equilibrium effects; Laboratory experiment (search for similar items in EconPapers)
JEL-codes: C91 K14 K42 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268118300520
Full text for ScienceDirect subscribers only

Related works:
Working Paper: The Impact of Fine Size and Uncertainty on Punishment and Deterrence: Theory and Evidence from the Laboratory (2015)
Working Paper: The impact of fine size and uncertainty on punishment and deterrence: Theory and evidence from the laboratory (2015)
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:eee:jeborg:v:149:y:2018:i:c:p:58-73

DOI: 10.1016/j.jebo.2018.02.021

Access Statistics for this article

Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.

More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().