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Penalty Structures and Deterrence in a Two-Stage Model: Experimental Evidence

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  • Anderson, Lisa R.
  • DeAngelo, Gregory
  • Emons, Winand
  • Freeborn, Beth
  • Lang, Hannes

Abstract

Increasing penalty structures for repeat offenses are ubiquitous in penal codes, despite little empirical or theoretical support. Multi-period models of criminal enforcement based on the standard economic approach of Becker (1968) generally find that the optimal penalty structure is either flat or declining. We experimentally test a two-stage theoretical model that predicts decreasing penalty structures will yield greater deterrence than increasing penalty structures. We find that decreasing fine structures are more effective at reducing risky behavior. Additionally, our econometric analyses reveal a number of behavioral findings. Subjects are deterred by past convictions, even though the probability of detection is independent across decisions. Further, subjects appear to take the two-stage nature of the decision making task into account, suggesting that subjects consider both current and future penalties. Even controlling for the fine a subject faces for any given decision, being in a decreasing fine structure has a significant effect on deterrence.

Suggested Citation

  • Anderson, Lisa R. & DeAngelo, Gregory & Emons, Winand & Freeborn, Beth & Lang, Hannes, 2015. "Penalty Structures and Deterrence in a Two-Stage Model: Experimental Evidence," CEPR Discussion Papers 10576, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10576
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    References listed on IDEAS

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    Cited by:

    1. Buehler, Stefan & Nicolas Eschenbaum, 2018. "Explaining Escalating Fines and Prices: The Curse of Positive Selection," Economics Working Paper Series 1807, University of St. Gallen, School of Economics and Political Science.
    2. DeAngelo, Gregory & Gee, Laura Katherine, 2018. "Peers or Police? Detection and Sanctions in the Provision of Public Goods," IZA Discussion Papers 11540, Institute for the Study of Labor (IZA).
    3. repec:bla:scotjp:v:64:y:2017:i:5:p:467-482 is not listed on IDEAS

    More about this item

    Keywords

    crime and punishment; deterrence; experimental evidence; repeat offenders;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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