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Testing a fine is a price in the lab

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  • Kornhauser, Lewis
  • Lu, Yijia
  • Tontrup, Stephan

Abstract

Recent research in experimental law and economics shows that the imposition of a fine, intended to deter some harmful behavior, may crowd out moral motivation: the behavior occurs more frequently even though a payment is charged to discourage it. In A Fine is a Price, Gneezy and Rustichini (2000) suggest that the payment may induce subjects to frame the intended prohibition as a permission in exchange for a price. Obviously, the effect if confirmed may impact almost any form of public regulation or contract drafting. May fines charged for plastic bags in fact increase usage? May penalty clauses in contracts increase the likelihood of breach?

Suggested Citation

  • Kornhauser, Lewis & Lu, Yijia & Tontrup, Stephan, 2020. "Testing a fine is a price in the lab," International Review of Law and Economics, Elsevier, vol. 63(C).
    • Handle: RePEc:eee:irlaec:v:63:y:2020:i:c:s0144818820301447
    DOI: 10.1016/j.irle.2020.105931
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    References listed on IDEAS

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