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Cheap talk about the detection probability

Florian Baumann () and Tim Friehe

No 90, DICE Discussion Papers from University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: This paper analyzes whether the behavior of potential offenders can be guided by information on the actual detection probability transmitted by the policy maker. It is established that, when viewed as a cheap-talk game, the existence of equilibria with information transmission depends on the level of the sanction, the level of costs related to imposing the sanction, and the level of social harm resulting from the offense. In addition, we find that the policy maker (i.e., society as a whole) is not necessarily better off ex ante when more information is transmitted in equilibrium, but that potential offenders always are.

Keywords: crime; cheap talk; law enforcement; imperfect information (search for similar items in EconPapers)
JEL-codes: K42 H23 C72 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cta, nep-exp, nep-law and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:90

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