Deterrence Effects of Enforcement Schemes: An Experimental Study

Marina Agranov () and Anastasia Buyalskaya ()
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Marina Agranov: Department of Humanities and Social Sciences, California Institute of Technology, Pasadena, California 91125
Anastasia Buyalskaya: Department of Humanities and Social Sciences, California Institute of Technology, Pasadena, California 91125

Management Science, 2022, vol. 68, issue 5, 3573-3589

Abstract: Private and public organizations are interested in finding effective ways to reduce crime and promote ethical behavior without investing heavy resources into monitoring and compliance. In this paper, we experimentally study how revealing different information about a fine distribution affects deterrence of an undesirable behavior. We use a novel incentive-compatible elicitation method to observe subjects lying (the undesirable behavior) and quantify the extent to which this behavior responds to information structures. We find that punishment schemes that communicate only partial information (the minimum fine in particular) are more effective than full information schemes at deterring lying. We explore the mechanism driving this result and link it to subjects’ beliefs about their own versus the average expected fine in treatments with partial information.

Keywords: deterrence hypothesis; laboratory experiment; information structure (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:68:y:2022:i:5:p:3573-3589

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