Uncertain Penalties and Compliance

Carol Luengo, Marcelo Caffera and Carlos Chavez

No 1407, Documentos de Trabajo/Working Papers from Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo.

Abstract: Using a series of laboratory economic experiments, we study the effect of information regarding the amount of the fine on the individual decision to violate an emission standard. Specifically, the analysis considers variations in the information available for the regulated subjects regarding the amount of the monetary sanction, as well as variations in the stringency in the inspection effort by the regulator. Our results suggest that in the case of a regulation design that induces compliance, the presence of uncertainty regarding the amount of the fine may increase violations in certain cases. When enforcement is not sufficient to induce compliance, the uncertainty regarding the amount of the fine does not have any effect on the level of transgression. Overall, the results suggest that a cost-effective regulation design should consider including public information on the consequences of an offense.

Keywords: Uncertainty; Risk; Compound risk; Fine; Emission standard; Economic experiment (search for similar items in EconPapers)
JEL-codes: C91 K42 L51 Q58 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-exp, nep-law and nep-reg
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www2.um.edu.uy/fcee_papers/2014/working_paper_um_cee_2014_07.pdf (application/pdf)

Related works:
Working Paper: Uncertain Penalties and Compliance (2019)
Working Paper: Uncertain Penalties and Compliance (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:mnt:wpaper:1407

Access Statistics for this paper

More papers in Documentos de Trabajo/Working Papers from Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo. Contact information at EDIRC.
Bibliographic data for series maintained by Mathias Ribeiro ().