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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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  9. Christian Traxler & Joachim Winter, 2009. "Survey Evidence on Conditional Norm Enforcement," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2009_03, Max Planck Institute for Research on Collective Goods.
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  12. Kessler, Daniel P & Levitt, Steven D, 1999. "Using Sentence Enhancements to Distinguish between Deterrence and Incapacitation," Journal of Law and Economics, University of Chicago Press, vol. 42(1), pages 343-63, April.
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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," NRN working papers 2009-23, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  2. Stefan Trautmann & Razvan Vlahu, 2011. "Strategic Loan Defaults and Coordination: An Experimental Analysis," DNB Working Papers 312, Netherlands Central Bank, Research Department.
  3. Duha T. Altindag, 2014. "Crime and International Tourism," Auburn Economics Working Paper Series auwp2014-01, Department of Economics, Auburn University.
  4. 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.

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