Slippery Fish: Enforcing Regulation when Agents Learn and Adapt

Andr's Gonz'lez Lira and Ahmed Mobarak
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Andr's Gonz'lez Lira: UC Berkeley

No 2143R, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Attempts to curb undesired behavior through regulation gets complicated when agents can adapt to circumvent enforcement. We test a model of enforcement with learning and adaptation, by auditing vendors selling illegal "sh in Chile in a randomized controlled trial, and tracking them daily using mystery shoppers. Conducting audits on a predictable schedule and (counter-intuitively) at high frequency is less e"ective, as agents learn to take advantage of loopholes. A consumer information campaign proves to be almost as cost-e"ective and curbing illegal sales, and obviates the need for complex monitoring and policing. The Chilean government subsequently chooses to scale up this campaign.

Pages: 89 pages
Date: 2018-08, Revised 2021-03
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Citations: View citations in EconPapers (7)

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