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

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  • Emons, Winand
  • Anderson, Lisa R.
  • Freeborn, Beth
  • Lang, Jan

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.

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  • Emons, Winand & Anderson, Lisa R. & Freeborn, Beth & Lang, Jan, 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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    2. Marcelo Caffera, 2017. "The deterrence effect of linear versus convex penalties in environmental policy: laboratory evidence," Documentos de Trabajo/Working Papers 1702, Facultad de Ciencias Empresariales y Economia. Universidad de Montevideo..
    3. Feess, Eberhard & Schildberg-Hörisch, Hannah & Schramm, Markus & Wohlschlegel, Ansgar, 2018. "The impact of fine size and uncertainty on punishment and deterrence: Theory and evidence from the laboratory," Journal of Economic Behavior & Organization, Elsevier, vol. 149(C), pages 58-73.
    4. Caffera, Marcelo & Chávez, Carlos & Ardente, Analía, 2018. "The deterrence effect of linear versus convex penalties in environmental policy: laboratory evidence," MPRA Paper 90946, University Library of Munich, Germany.
    5. Roee Sarel, 2022. "Crime and punishment in times of pandemics," European Journal of Law and Economics, Springer, vol. 54(2), pages 155-186, October.
    6. 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.
    7. DeAngelo, Gregory & Gee, Laura Katherine, 2018. "Peers or Police? Detection and Sanctions in the Provision of Public Goods," IZA Discussion Papers 11540, Institute of Labor Economics (IZA).
    8. Espinosa, Romain & DeAngelo, Gregory & Deffains, Bruno & Mungan, Murat & Romaniuc, Rustam, 2021. "The price of expungements," International Review of Law and Economics, Elsevier, vol. 65(C).
    9. Wolfgang Eggert & Steffen Minter & Maximilian Stephan & Handirk Ungern-Sternberg, 2017. "Sanctions for repeat offenders: a question of wealth?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(5), pages 467-482, November.
    10. Buehler, Stefan & Eschenbaum, Nicolas, 2020. "Explaining escalating prices and fines: A unified approach," Journal of Economic Behavior & Organization, Elsevier, vol. 171(C), pages 153-164.
    11. DeAngelo, Gregory & Gee, Laura K., 2020. "Peers or police?: The effect of choice and type of monitoring in the provision of public goods," Games and Economic Behavior, Elsevier, vol. 123(C), pages 210-227.

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    Keywords

    Crime and punishment; Deterrence; Experimental evidence; Repeat offenders;
    All these keywords.

    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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