IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/28610.html
   My bibliography  Save this paper

Slippery Fish: Enforcing Regulation when Agents Learn and Adapt

Author

Listed:
  • Andres Gonzalez-Lira
  • Ahmed Mushfiq Mobarak

Abstract

Attempts to curb undesired behavior through regulation gets complicated when agents can adapt to circumvent enforcement. We test a model of enforcement with learning and adaptation, by auditing vendors selling illegal fish in Chile in a randomized controlled trial, and tracking them daily using mystery shoppers. Conducting audits on a predictable schedule and (counter-intuitively) at high frequency is less effective, as agents learn to take advantage of loopholes. A consumer information campaign proves to be almost as cost-effective and curbing illegal sales, and obviates the need for complex monitoring and policing. The Chilean government subsequently chooses to scale up this campaign.

Suggested Citation

  • Andres Gonzalez-Lira & Ahmed Mushfiq Mobarak, 2021. "Slippery Fish: Enforcing Regulation when Agents Learn and Adapt," NBER Working Papers 28610, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:28610
    Note: DEV EEE LE POL
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w28610.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Edward L. Glaeser & Andrei Shleifer, 2003. "The Rise of the Regulatory State," Journal of Economic Literature, American Economic Association, vol. 41(2), pages 401-425, June.
    2. 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.
    3. Shimshack, Jay P. & Ward, Michael B., 2005. "Regulator reputation, enforcement, and environmental compliance," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 519-540, November.
    4. Esther Duflo & Michael Greenstone & Nicholas Ryan, 2013. "Truth-telling by Third-party Auditors and the Response of Polluting Firms: Experimental Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 128(4), pages 1499-1545.
    5. Benjamin Hansen, 2015. "Punishment and Deterrence: Evidence from Drunk Driving," American Economic Review, American Economic Association, vol. 105(4), pages 1581-1617, April.
    6. Dina Pomeranz, 2015. "No Taxation without Information: Deterrence and Self-Enforcement in the Value Added Tax," American Economic Review, American Economic Association, vol. 105(8), pages 2539-2569, August.
    7. Paul Carrillo & Dina Pomeranz & Monica Singhal, 2017. "Dodging the Taxman: Firm Misreporting and Limits to Tax Enforcement," American Economic Journal: Applied Economics, American Economic Association, vol. 9(2), pages 144-164, April.
    8. Joana Naritomi, 2019. "Consumers as Tax Auditors," American Economic Review, American Economic Association, vol. 109(9), pages 3031-3072, September.
    9. Florian Ederer & Richard Holden & Margaret Meyer, 2018. "Gaming and strategic opacity in incentive provision," RAND Journal of Economics, RAND Corporation, vol. 49(4), pages 819-854, December.
    10. Robert N. Stavins, 2011. "The Problem of the Commons: Still Unsettled after 100 Years," American Economic Review, American Economic Association, vol. 101(1), pages 81-108, February.
    11. repec:hrv:faseco:30747197 is not listed on IDEAS
    12. Deniz Okat, 2016. "Deterring fraud by looking away," RAND Journal of Economics, RAND Corporation, vol. 47(3), pages 734-747, August.
    13. Karthik Muralidharan & Mauricio Romero & Kaspar Wüthrich, 2019. "Factorial Designs, Model Selection, and (Incorrect) Inference in Randomized Experiments," NBER Working Papers 26562, National Bureau of Economic Research, Inc.
    14. Nicky J. Welton & Howard H. Z. Thom, 2015. "Value of Information," Medical Decision Making, , vol. 35(5), pages 564-566, July.
    15. Ginger Zhe Jin & Phillip Leslie, 2003. "The Effect of Information on Product Quality: Evidence from Restaurant Hygiene Grade Cards," The Quarterly Journal of Economics, Oxford University Press, vol. 118(2), pages 409-451.
    16. Abebe Shimeles & Daniel Zerfu Gurara & Firew Woldeyes, 2017. "Taxman's Dilemma: Coercion or Persuasion? Evidence from a Randomized Field Experiment in Ethiopia," American Economic Review, American Economic Association, vol. 107(5), pages 420-424, May.
    17. Hugh Gravelle & Matt Sutton & Ada Ma, 2010. "Doctor Behaviour under a Pay for Performance Contract: Treating, Cheating and Case Finding?," Economic Journal, Royal Economic Society, vol. 120(542), pages 129-156, February.
    18. Alm, James & Jackson, Betty R. & McKee, Michael, 2009. "Getting the word out: Enforcement information dissemination and compliance behavior," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 392-402, April.
    19. Christopher Hansman & Jonas Hjort & Gianmarco León, 2019. "Interlinked firms and the consequences of piecemeal regulation," Journal of the European Economic Association, European Economic Association, vol. 17(3), pages 876-916.
    20. Wayne B. Gray & Jay P. Shimshack, 2011. "The Effectiveness of Environmental Monitoring and Enforcement: A Review of the Empirical Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 5(1), pages 3-24, Winter.
    21. Edward Miguel & Michael Kremer, 2004. "Worms: Identifying Impacts on Education and Health in the Presence of Treatment Externalities," Econometrica, Econometric Society, vol. 72(1), pages 159-217, January.
    22. Lucas, Robert Jr, 1976. "Econometric policy evaluation: A critique," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 1(1), pages 19-46, January.
    23. Ritva Reinikka & Jakob Svensson, 2005. "Fighting Corruption to Improve Schooling: Evidence from a Newspaper Campaign in Uganda," Journal of the European Economic Association, MIT Press, vol. 3(2-3), pages 259-267, 04/05.
    24. Jens Hainmueller & Michael J. Hiscox & Sandra Sequeira, 2015. "Consumer Demand for Fair Trade: Evidence from a Multistore Field Experiment," The Review of Economics and Statistics, MIT Press, vol. 97(2), pages 242-256, May.
    25. William C. Boning & John Guyton & Ronald H. Hodge, II & Joel Slemrod & Ugo Troiano, 2018. "Heard it Through the Grapevine: Direct and Network Effects of a Tax Enforcement Field Experiment," NBER Working Papers 24305, National Bureau of Economic Research, Inc.
    26. Johnson, Matthew S & Levine, David I & Toffel, Michael W, 2019. "Improving Regulatory Effectiveness through Better Targeting: Evidence from OSHA," Institute for Research on Labor and Employment, Working Paper Series qt1gq7z4j3, Institute of Industrial Relations, UC Berkeley.
    27. Edward P. Lazear, 2006. "Speeding, Terrorism, and Teaching to the Test," The Quarterly Journal of Economics, Oxford University Press, vol. 121(3), pages 1029-1061.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kastoryano, Stephen & Vollaard, Ben, 2022. "Nautical Patrol and Illegal Fishing Practices," Discussion Paper 2022-016, Tilburg University, Center for Economic Research.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gonzalez-Lira, Andres & Mobarak, Ahmed Mushfiq, 2019. "Slippery Fish: Enforcing Regulation under Subversive Adaptation," IZA Discussion Papers 12179, Institute of Labor Economics (IZA).
    2. Gonzalez Lira, Andres & Mobarak, Ahmed Mushfiq, 2018. "Enforcing Regulation under Illicit Adaptation," CEPR Discussion Papers 13114, C.E.P.R. Discussion Papers.
    3. Christopher Hoy & Luke McKenzie & Mathias Sinning, 2020. "Improving tax compliance without increasing revenue: Evidence from population-wide randomized controlled trials in Papua New Guinea," Departmental Working Papers 2020-27, The Australian National University, Arndt-Corden Department of Economics.
    4. Alm, James & Shimshack, Jay, 2014. "Environmental Enforcement and Compliance: Lessons from Pollution, Safety, and Tax Settings," Foundations and Trends(R) in Microeconomics, now publishers, vol. 10(4), pages 209-274, December.
    5. Antinyan, Armenak & Asatryan, Zareh, 2019. "Nudging for tax compliance: A meta-analysis," ZEW Discussion Papers 19-055, ZEW - Leibniz Centre for European Economic Research.
    6. Dina Pomeranz & José Vila-Belda, 2019. "Taking State-Capacity Research to the Field: Insights from Collaborations with Tax Authorities," Annual Review of Economics, Annual Reviews, vol. 11(1), pages 755-781, August.
    7. Lopez-Luzuriaga, Andrea & Scartascini, Carlos, 2019. "Compliance spillovers across taxes: The role of penalties and detection," Journal of Economic Behavior & Organization, Elsevier, vol. 164(C), pages 518-534.
    8. Balan, Pablo & Bergeron, Augustin & Tourek, Gabriel & Weigel, Jonathan, 2020. "Local Elites as State Capacity: How City Chiefs Use Local Information to Increase Tax Compliance in the D.R. Congo," CEPR Discussion Papers 15138, C.E.P.R. Discussion Papers.
    9. Kjetil Telle, 2012. "Monitoring and enforcement of environmental regulations. Lessons from a natural field experiment in Norway," Discussion Papers 680, Statistics Norway, Research Department.
    10. James Alm & Matthias Kasper, 2020. "Laboratory Experiments," Working Papers 2008, Tulane University, Department of Economics.
    11. James Alm, 2019. "What Motivates Tax Compliance?," Journal of Economic Surveys, Wiley Blackwell, vol. 33(2), pages 353-388, April.
    12. Telle, Kjetil, 2013. "Monitoring and enforcement of environmental regulations," Journal of Public Economics, Elsevier, vol. 99(C), pages 24-34.
    13. Kaisa Kotakorpi & Satu Metsälampi & Topi Miettinen & Tuomas Nurminen, 2019. "The effect of reporting institutions on tax evasion:Evidence from the lab," Discussion Papers 127, Aboa Centre for Economics.
    14. Jacopo Bizzotto & Alessandro De Chiara, 2022. "Frequent audits and honest audits," UB Economics Working Papers 2022/417, Universitat de Barcelona, Facultat d'Economia i Empresa, UB School of Economics.
    15. Li, Lixing & Liu, Kevin Zhengcheng & Nie, Zhuo & Xi, Tianyang, 2021. "Evading by any means? VAT enforcement and payroll tax evasion in China," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 770-784.
    16. Weigel, Jonathan, 2020. "The participation dividend of taxation: how citizens in Congo engage more with the state when it tries to tax them," LSE Research Online Documents on Economics 104561, London School of Economics and Political Science, LSE Library.
    17. Kaisa Kotakorpi & Satu Metsälampi & Topi Miettinen & Tuomas Nurminen, 2021. "The role of reporting institutions and image motivation in tax evasion and incidence," Working Papers 2133, Tampere University, School of Management and Business, Economics.
    18. Adhikari, Bibek & Alm, James & Harris, Timothy F., 2021. "Small business tax compliance under third-party reporting," Journal of Public Economics, Elsevier, vol. 203(C).
    19. Konda, Laura & Patel, Elena & Seegert, Nathan, 2022. "Tax enforcement and the intended and unintended consequences of information disclosure," Journal of Public Economics, Elsevier, vol. 212(C).
    20. Hallsworth, Michael & List, John A. & Metcalfe, Robert D. & Vlaev, Ivo, 2017. "The behavioralist as tax collector: Using natural field experiments to enhance tax compliance," Journal of Public Economics, Elsevier, vol. 148(C), pages 14-31.

    More about this item

    JEL classification:

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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:28610. 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: . General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.