Penalty Structures and Deterrance in a Two-Stage Model: Experimental Evidence

Anderson, Lisa R.; DeAngelo, Gregory; Emons, Winand; Freeborn, Beth; Lang, Hannes (April 2015). Penalty Structures and Deterrance in a Two-Stage Model: Experimental Evidence (Discussion Papers 15-05). Bern: Department of Economics

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Increasing penalty structures for repeat offenses are ubiquitous in penal codes, despite
little empirical or theoretical support. Multi-period models of criminal enforcement based on the standard economic approach of Becker (1968) generally find that the optimal penalty structure is either flat or declining. We experimentally test a two-stage theoretical model that predicts decreasing penalty structures will yield greater deterrence than increasing penalty structures. We find that decreasing fine structures are more effective at reducing risky behavior. Additionally, our econometric analyses reveal a number of behavioral findings. Subjects are deterred by past convictions, even though the probability of detection is independent across decisions. Further, subjects appear to take the two-stage nature of the decision making task into account, suggesting that subjects consider both current and future penalties. Even controlling for the fine a subject faces for any given decision, being in a decreasing fine structure has a significant effect on deterrence.

Item Type:

Working Paper

Division/Institute:

03 Faculty of Business, Economics and Social Sciences > Department of Economics

UniBE Contributor:

Emons, Winand

Subjects:

300 Social sciences, sociology & anthropology > 330 Economics

Series:

Discussion Papers

Publisher:

Department of Economics

Language:

English

Submitter:

Lars Tschannen

Date Deposited:

18 Dec 2020 14:35

Last Modified:

18 Dec 2020 14:35

JEL Classification:

C91, K42, K10

BORIS DOI:

10.7892/boris.145814

URI:

https://boris.unibe.ch/id/eprint/145814

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