Trust, Leniency and Deterrence
This paper presents results from a laboratory experiment studying the channels through which different law enforcement strategies deter cartel formation. With leniency policies offering immunity to the first reporting party, a high fine is the main determinant of deterrence, having a strong effect even when the probability of exogenous detection is zero. Deterrence appears to be mainly driven by ‘distrust’; here, the fear of partners deviating and reporting. Absent leniency, the probability of detection and the expected fine matter more, and low fines are exploited to punish defections. The results appear relevant to several other forms of crimes that share cartels’ strategic features, including corruption and financial fraud.
|Date of creation:||17 Jan 2011|
|Date of revision:||11 Dec 2014|
|Contact details of provider:|| Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden|
Phone: +46 8 665 4500
Fax: +46 8 665 4599
Web page: http://www.ifn.se/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bigoni, Maria & Fridolfsson, Sven-Olof & Le Coq, Chloé & Spagnolo, Giancarlo, 2009.
"Fines, Leniency and Rewards in Antitrust: an Experiment,"
CEPR Discussion Papers
7417, C.E.P.R. Discussion Papers.
- Bigoni, Maria & Fridolfsson, Sven-Olof & Le Coq, Chloé & Spagnolo, Giancarlo, 2008. "Fines, Leniency and Rewards in Antitrust: An Experiment," Working Paper Series 738, Research Institute of Industrial Economics, revised 06 Aug 2009.
- Ernst Fehr & John A. List, 2004.
"The Hidden Costs and Returns of Incentives-Trust and Trustworthiness Among CEOs,"
Journal of the European Economic Association,
MIT Press, vol. 2(5), pages 743-771, 09.
- Ernst Fehr & John A. List, 2004. "THE HIDDEN COSTS AND RETURNS OF INCENTIVES — TRUST AND TRUSTWORTHINESS AMONG CEOs," Labor and Demography 0409012, EconWPA.
- E. Fehr & John A. List, . "The Hidden Costs and Returns of Incentives - Trust and Trustworthiness among CEOs," IEW - Working Papers 134, Institute for Empirical Research in Economics - University of Zurich.
- Ernst Fehr & John List, 2004. "The hidden costs and returns of incentives - trust and trustworthiness among ceos," Artefactual Field Experiments 00044, The Field Experiments Website.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
- Joseph E. Harrington, Jr & Roberto Hernan-Gonzalez & Praveen Kujal, 2013.
"The Relative Efficacy of Price Announcements and Express Communication for Collusion: Experimental Findings,"
13-30, Chapman University, Economic Science Institute.
- Harrington, Joseph E. & Hernan Gonzalez, Roberto & Kujal, Praveen, 2016. "The relative efficacy of price announcements and express communication for collusion: Experimental findings," Journal of Economic Behavior & Organization, Elsevier, vol. 128(C), pages 251-264.
- Theo Offerman & Jan Potters & Joep Sonnemans, 2002.
"Imitation and Belief Learning in an Oligopoly Experiment,"
Review of Economic Studies,
Oxford University Press, vol. 69(4), pages 973-997.
- Offerman, T.J.S. & Potters, J.J.M. & Sonnemans, J., 2002. "Imitation and belief learning in an oligopoly experiment," Other publications TiSEM a6a771c5-31ba-4193-8f76-a, Tilburg University, School of Economics and Management.
- Theo Offerman & Jan Potters & Joep Sonnemans, 1997. "Imitation and Belief Learning in an Oligopoly Experiment," Tinbergen Institute Discussion Papers 97-116/1, Tinbergen Institute.
- Spagnolo, Giancarlo, 2004. "Divide et Impera: Optimal Leniency Programmes," CEPR Discussion Papers 4840, C.E.P.R. Discussion Papers.
- Paola Sapienza & Anna Toldra & Luigi Zingales, 2007.
NBER Working Papers
13387, National Bureau of Economic Research, Inc.
- Jeroen Hinloopen & Adriaan R. Soetevent, 2008. "Laboratory evidence on the effectiveness of corporate leniency programs," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 607-616.
- Motta, Massimo & Polo, Michele, 2003.
"Leniency programs and cartel prosecution,"
International Journal of Industrial Organization,
Elsevier, vol. 21(3), pages 347-379, March.
- Massimo Motta & Michele Polo, . "Leniency Programs and Cartel Prosecution," Working Papers 150, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- Motta, Massimo & Polo, Michele, 2000. "Leniency Programs and Cartel Prosecution," CEPR Discussion Papers 2349, C.E.P.R. Discussion Papers.
- Motta, M. & Polo, M., 1999. "Leniency Programs and Cartel Prosecution," Economics Working Papers eco99/23, European University Institute.
- Gary Charness & Martin Dufwenberg, 2004.
"Promises and Partnership,"
122247000000000001, UCLA Department of Economics.
- Kaplow, Louis & Shavell, Steven, 1994.
"Optimal Law Enforcement with Self-Reporting of Behavior,"
Journal of Political Economy,
University of Chicago Press, vol. 102(3), pages 583-606, June.
- Louis Kaplow & Steven Shavell, 1991. "Optimal Law Enforcement with Self-Reporting of Behavior," NBER Working Papers 3822, National Bureau of Economic Research, Inc.
- Ernst Fehr, 2009.
"On The Economics and Biology of Trust,"
Journal of the European Economic Association,
MIT Press, vol. 7(2-3), pages 235-266, 04-05.
- Ernst Fehr, 2009. "On the economics and biology of trust," IEW - Working Papers 399, Institute for Empirical Research in Economics - University of Zurich.
- Fehr, Ernst, 2008. "On the Economics and Biology of Trust," IZA Discussion Papers 3895, Institute for the Study of Labor (IZA).
- Ernst Fehr, 2008. "On the Economics and Biology of Trust," SOEPpapers on Multidisciplinary Panel Data Research 154, DIW Berlin, The German Socio-Economic Panel (SOEP).
- Crawford, Vincent, 1998. "A Survey of Experiments on Communication via Cheap Talk," Journal of Economic Theory, Elsevier, vol. 78(2), pages 286-298, February.
- Hörisch, Hannah & Strassmair, Christina, 2008.
"An experimental test of the deterrence hypothesis,"
Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
229, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Hamaguchi, Yasuyo & Kawagoe, Toshiji & Shibata, Aiko, 2009. "Group size effects on cartel formation and the enforcement power of leniency programs," International Journal of Industrial Organization, Elsevier, vol. 27(2), pages 145-165, March.
- Matthias Blonski & Peter Ockenfels & Giancarlo Spagnolo, 2011. "Equilibrium Selection in the Repeated Prisoner's Dilemma: Axiomatic Approach and Experimental Evidence," American Economic Journal: Microeconomics, American Economic Association, vol. 3(3), pages 164-92, August.
- Joseph E. Harrington Jr, 2013. "Corporate Leniency Programs when Firms have Private Information: The Push of Prosecution and the Pull of Pre-emption," Journal of Industrial Economics, Wiley Blackwell, vol. 61(1), pages 1-27, 03.
- Gary S. Becker, 1968.
"Crime and Punishment: An Economic Approach,"
Journal of Political Economy,
University of Chicago Press, vol. 76, pages 169.
- Myong-Hun Chang & Joseph E. Harrington, Jr., 2008. "The Impact of a Corporate Leniency Program on Antitrust Enforcement and Cartelization," Economics Working Paper Archive 548, The Johns Hopkins University,Department of Economics.
- Jana Krajcova & Andreas Ortmann, 2008. "Testing Leniency Programs Experimentally: The Impact of “Natural” Framing," CERGE-EI Working Papers wp372, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
- Armin Falk & Michael Kosfeld, .
"The Hidden Costs of Control,"
IEW - Working Papers
250, Institute for Empirical Research in Economics - University of Zurich.
- Charness, Gary B & Dufwenberg, Martin, 2006.
"Promises & Partnership,"
University of California at Santa Barbara, Economics Working Paper Series
qt0127h86v, Department of Economics, UC Santa Barbara.
- Steffen Huck & Hans-Theo Normann & Jörg Oechssler, 2001.
"Two are Few and Four are Many: Number Effects in Experimental Oligopolies,"
Bonn Econ Discussion Papers
bgse12_2001, University of Bonn, Germany.
- Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004. "Two are few and four are many: number effects in experimental oligopolies," Journal of Economic Behavior & Organization, Elsevier, vol. 53(4), pages 435-446, April.
- Heski Bar-Isaac & Mariagiovanna Baccara, 2006. "How to Organize Crime," Working Papers 06-07, New York University, Leonard N. Stern School of Business, Department of Economics.
- Nuno Garoupa, 1999.
"Optimal law enforcement and criminal organization,"
Economics Working Papers
366, Department of Economics and Business, Universitat Pompeu Fabra.
- Nathan H. Miller, 2009. "Strategic Leniency and Cartel Enforcement," American Economic Review, American Economic Association, vol. 99(3), pages 750-68, June.
- Maria Bigoni & Sven-Olof Fridolfsson & Chloé Le Coq & Giancarlo Spagnolo, 2012. "fines, leniency, and rewards in antitrust," RAND Journal of Economics, RAND Corporation, vol. 43(2), pages 368-390, 06.
- Brenner, Steffen, 2009. "An empirical study of the European corporate leniency program," International Journal of Industrial Organization, Elsevier, vol. 27(6), pages 639-645, November.
- Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2005.
"Trusting the Stock Market,"
CEPR Discussion Papers
5288, C.E.P.R. Discussion Papers.
When requesting a correction, please mention this item's handle: RePEc:hhs:iuiwop:0859. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elisabeth Gustafsson)
If references are entirely missing, you can add them using this form.