Hard Labour in the lab: Are monetary and non-monetary sanctions really substitutable?
Matteo Rizzolli and
Vienna Economics Papers from University of Vienna, Department of Economics
The theory of optimal deterrence suggests the substitution of mon- etary sanctions over non-monetary sanctions whenever this is possible because non-monetary sanctions are more socially costly. This pre- scription is based on the assumption that monetary and non-monetary sanctions are perfect substitutes: there exists a monetary equivalent of a non-monetary sanction that, if used as a ne, produces the same level of deterrence. We test this assumption with an experiment. In our stealing game potential thieves face the possibility of punishment. Our non-monetary sanction treatments mimic hard labour: we require convicted individuals to carry out a tedious real e ort task. In the monetary treatments sanctions are insteadones, which are based on individuals' willingness to pay to avoid the effort task to ensure com- parability to the non-monetary treatment. A second manipulation of our experiment concerns the balance of errors in the adjudication pro- cedure (convictions of innocents and acquittal of guilty individuals). We and that stealing is reduced most e ectively by a sanction regime that combines non-monetary sanctions with a severe procedure. Our data is consistent with the notion that both monetary punishment and pro-defendant sanction regimes are less effective in communicat- ing moral condemnation of an act.
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