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Reputational versus Beckerian Sanctions
[A Theory of Esteem Based Peer Pressure]

Author

Listed:
  • Claude Fluet
  • Murat C Mungan

Abstract

Legal sanctions cause reputational losses in addition to the direct losses. Lowering the probability of punishment reduces these reputational losses by diluting the informational value of verdicts. These considerations better align the positive as well as normative implications of law enforcement models with intuition and empirics: violations of the law are more responsive to the certainty rather than the severity of punishment even absent risk-seeking offenders (positive), which causes extreme Beckerian punishments to be inefficient when sanctions are socially costly to impose (normative). Moreover, in some cases optimal enforcement is “anti-Beckerian”: punishment is symbolic, and detection costs are incurred solely to provide reputational incentives.

Suggested Citation

  • Claude Fluet & Murat C Mungan, 2022. "Reputational versus Beckerian Sanctions [A Theory of Esteem Based Peer Pressure]," American Law and Economics Review, American Law and Economics Association, vol. 24(1), pages 247-277.
    • Handle: RePEc:oup:amlawe:v:24:y:2022:i:1:p:247-277.
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    File URL: http://hdl.handle.net/10.1093/aler/ahab016
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    More about this item

    Keywords

    D82; K00; K14; K42;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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