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Trust, Salience and Deterrence: Evidence from an Antitrust Experiment

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Author Info

  • Bigoni, Maria

    ()
    (University of Bologna)

  • Fridolfsson, Sven-Olof

    ()
    (Research Institute of Industrial Economics (IFN))

  • Le Coq, Chloe

    ()
    (Stockholm School of Economics)

  • Spagnolo, Giancarlo

    ()
    (University of Rome)

Abstract

We present results from a laboratory experiment identifying the main channels through which different law enforcement strategies deter organized economic crime. The absolute level of a fine has a strong deterrence effect, even when the exogenous probability of apprehension is zero. This effect appears to be driven by distrust or fear of betrayal, as it increases significantly when the incentives to betray partners are strengthened by policies offering amnesty to “turncoat whistleblowers”. We also document a strong deterrence effect of the sum of fines paid in the past, which suggests a significant role for salience or availability heuristic in law enforcement.

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File URL: http://www.ifn.se/wfiles/wp/wp859.pdf
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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 859.

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Length: 46 pages
Date of creation: 17 Jan 2011
Date of revision:
Handle: RePEc:hhs:iuiwop:0859

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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
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Fax: +46 8 665 4599
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Related research

Keywords: Betrayal; Collusion; Corruption; Distrust; Fraud; Organized Crime; Whistleblowers;

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Cited by:
  1. Joseph E. Harrington, Jr., 2011. "Corporate Leniency with Private Information: The Push of Prosecution and the Pull of Pre-emption," Economics Working Paper Archive 573, The Johns Hopkins University,Department of Economics.
  2. Sascha Behnk & Iván Barreda-Tarrazona & Aurora García-Gallego, 2012. "Reducing deception through subsequent transparency - An experimental investigation," Working Papers 2012/14, Economics Department, Universitat Jaume I, Castellón (Spain).

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