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Deterrence Through Word of Mouth

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  • Johannes Rincke

    ()
    (University of Munich, Department of Economics, Seminar for Economic Policy)

  • Christian Traxler

    ()
    (Max Planck Institute for Research on Collective Goods, Bonn)

Abstract

The deterrent effect of law enforcement rests on the link between the actual and the perceived detection risk. We study the role of word of mouth for this linkage. Our approach makes use of micro data on compliance with TV license fees allowing us to distinguish between households who have been subject to enforcement and those who have not. Exploiting local variation in field inspectors' efforts induced by snowfall, we find a striking response of households to increased enforcement in their vicinity, with compliance rising significantly among those who had no interaction with inspectors. As we can exclude other channels of information transmission, our finding establishes a substantial deterrent effect mediated by word of mouth.

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Bibliographic Info

Paper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2009_04.

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Date of creation: Jan 2009
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Handle: RePEc:mpg:wpaper:2009_04

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Keywords: Deterrence; Law enforcement; Word of mouth;

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References

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  1. Sah, R.K., 1990. "Social Osmosis And Patterns Of Crime: A Dynamic Economic Analysis," Papers 609, Yale - Economic Growth Center.
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  15. Daniel Kessler & Steven D. Levitt, 1998. "Using Sentence Enhancements to Distinguish between Deterrence and Incapacitation," NBER Working Papers 6484, National Bureau of Economic Research, Inc.
  16. Traxler, Christian & Winter, Joachim, 2012. "Survey evidence on conditional norm enforcement," European Journal of Political Economy, Elsevier, vol. 28(3), pages 390-398.
  17. Camerer, Colin, et al, 1997. "Labor Supply of New York City Cabdrivers: One Day at a Time," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 407-41, May.
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Cited by:
  1. Gerlinde Fellner & Rupert Sausgruber & Christian Traxler, 2009. "Testing Enforcement Strategies in the Field: Legal Threat, Moral Appeal and Social Information," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2009_31, Max Planck Institute for Research on Collective Goods.
  2. Duha T. Altindag, 2014. "Crime and International Tourism," Auburn Economics Working Paper Series auwp2014-01, Department of Economics, Auburn University.
  3. Naci Mocan & Kaj Gittings, 2010. "The Impact of Incentives on Human Behavior: Can We Make it Disappear? The Case of the Death Penalty," NBER Chapters, in: The Economics of Crime: Lessons for and from Latin America, pages 379-418 National Bureau of Economic Research, Inc.
  4. Stefan Trautmann & Razvan Vlahu, 2011. "Strategic Loan Defaults and Coordination: An Experimental Analysis," DNB Working Papers 312, Netherlands Central Bank, Research Department.

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