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Cheap Talk About The Detection Probability



    (DICE, University of Düsseldorf, Universitätsstr. 1, 40225 Düsseldorf, Germany)


    () (University of Bonn, Center for Advanced Studies in Law and Economics, 53113 Bonn, Germany;
    CESifo, Munich, Germany)


This paper analyzes whether the behavior of potential offenders can be guided by information on the actual detection probability transmitted by the policy maker. It is established that, when viewed as a cheap-talk game, the existence of equilibria with information transmission depends on the level of the sanction, the level of costs related to imposing the sanction, and the level of social harm resulting from the offense. In addition, we find that the policy maker (i. e., society as a whole) is not necessarily better off ex ante when more information is transmitted in equilibrium, but that potential offenders always are.

Suggested Citation

  • Florian Baumann & Tim Friehe, 2013. "Cheap Talk About The Detection Probability," International Game Theory Review (IGTR), World Scientific Publishing Co. Pte. Ltd., vol. 15(01), pages 1-16.
  • Handle: RePEc:wsi:igtrxx:v:15:y:2013:i:01:n:s0219198913500035 DOI: 10.1142/S0219198913500035

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    References listed on IDEAS

    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters,in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
    2. Polinsky, A. Mitchell & Shavell, Steven, 2001. "Corruption and optimal law enforcement," Journal of Public Economics, Elsevier, vol. 81(1), pages 1-24, July.
    3. John Schmitt & Kris Warner, 2010. "The High Budgetary Cost of Incarceration," CEPR Reports and Issue Briefs 2010-28, Center for Economic and Policy Research (CEPR).
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    6. Bebchuk, Lucian Arye & Kaplow, Louis, 1992. "Optimal Sanctions When Individuals Are Imperfectly Informed about the Probability of Apprehension," The Journal of Legal Studies, University of Chicago Press, vol. 21(2), pages 365-370, June.
    7. Joseph Farrell & Matthew Rabin, 1996. "Cheap Talk," Journal of Economic Perspectives, American Economic Association, vol. 10(3), pages 103-118, Summer.
    8. Ben-Shahar, Omri, 1997. "Playing without a rulebook: Optimal enforcement when individuals learn the penalty only by committing the crime," International Review of Law and Economics, Elsevier, vol. 17(3), pages 409-421, September.
    9. Polinsky, A. Mitchell, 2006. "The optimal use of fines and imprisonment when wealth is unobservable," Journal of Public Economics, Elsevier, vol. 90(4-5), pages 823-835, May.
    10. Donald Kenkel & Steven Koch, 2001. "Deterrence and knowledge of the law: The case of drunk driving," Applied Economics, Taylor & Francis Journals, vol. 33(7), pages 845-854.
    11. Cameron, Samuel, 1988. "The Economics of Crime Deterrence: A Survey of Theory and Evidence," Kyklos, Wiley Blackwell, vol. 41(2), pages 301-323.
    12. Sah, Raaj K, 1991. "Social Osmosis and Patterns of Crime," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1272-1295, December.
    13. Polinsky, A Mitchell & Shavell, Steven, 1992. "Enforcement Costs and the Optimal Magnitude and Probability of Fines," Journal of Law and Economics, University of Chicago Press, vol. 35(1), pages 133-148, April.
    14. A. Mitchell Polinsky & Steven Shavell, 2009. "Public Enforcement of Law," Chapters,in: Criminal Law and Economics, chapter 1 Edward Elgar Publishing.
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    16. Ivanov, Maxim, 2010. "Communication via a strategic mediator," Journal of Economic Theory, Elsevier, vol. 145(2), pages 869-884, March.
    17. Numa Garoupa, 1999. "Optimal Law Enforcement with Dissemination of Information," European Journal of Law and Economics, Springer, vol. 7(3), pages 183-196, May.
    18. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
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    More about this item


    Crime; cheap talk; law enforcement; imperfect information; K42; H23; C72;

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology
    • C0 - Mathematical and Quantitative Methods - - General
    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics


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