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Slippery Fish: Enforcing Regulation under Subversive Adaptation

Author

Listed:
  • Gonzalez-Lira, Andres

    (University of California, Berkeley)

  • Mobarak, Ahmed Mushfiq

    (Yale University)

Abstract

Attempts to curb illegal activity through regulation gets complicated when agents can adapt to circumvent enforcement. Economic theory suggests that conducting audits on a predictable schedule, and (counter-intuitively) at high frequency, can undermine the effectiveness of audits. We conduct a large-scale randomized controlled trial to test these ideas by auditing Chilean vendors selling illegal fish. Vendors circumvent penalties through hidden sales and other means, which we track using mystery shoppers. Instituting monitoring visits on an unpredictable schedule is more effective at reducing illegal sales. High frequency monitoring to prevent displacement across weekdays to other markets backfires, because targeted agents learn faster and cheat more effectively. Sophisticated policy design is therefore crucial for determining the sustained, longer-term effects of enforcement. A simpler demand-side information campaign generates two-thirds of the gains compared to the most effective monitoring scheme, it is easier for the government to implement, and is almost as cost-effective. The government subsequently chose to scale up that simpler strategy.

Suggested Citation

  • Gonzalez-Lira, Andres & Mobarak, Ahmed Mushfiq, 2019. "Slippery Fish: Enforcing Regulation under Subversive Adaptation," IZA Discussion Papers 12179, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp12179
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    References listed on IDEAS

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    Cited by:

    1. Daniel Bjorkegren & Joshua E. Blumenstock & Samsun Knight, 2020. "Manipulation-Proof Machine Learning," Papers 2004.03865, arXiv.org.

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    More about this item

    Keywords

    enforcement; regulation; law and economics; fisheries;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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