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Cheap talk about the detection probability

Author

Listed:
  • Baumann, Florian
  • Friehe, Tim

Abstract

This paper analyzes whether the behavior of potential offenders can be guided by information on the actual detection probability transmitted by the policy maker. It is established that, when viewed as a cheap-talk game, the existence of equilibria with information transmission depends on the level of the sanction, the level of costs related to imposing the sanction, and the level of social harm resulting from the offense. In addition, we find that the policy maker (i.e., society as a whole) is not necessarily better off ex ante when more information is transmitted in equilibrium, but that potential offenders always are.

Suggested Citation

  • Baumann, Florian & Friehe, Tim, 2013. "Cheap talk about the detection probability," DICE Discussion Papers 90, University of Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  • Handle: RePEc:zbw:dicedp:90
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    References listed on IDEAS

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    1. Polinsky, A Mitchell & Shavell, Steven, 1992. "Enforcement Costs and the Optimal Magnitude and Probability of Fines," Journal of Law and Economics, University of Chicago Press, vol. 35(1), pages 133-148, April.
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    7. Lance Lochner, 2007. "Individual Perceptions of the Criminal Justice System," American Economic Review, American Economic Association, vol. 97(1), pages 444-460, March.
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    Cited by:

    1. Berno Buechel & Eberhard Feess & Gerd Muehlheusser, 2018. "Optimal Law Enforcement with Sophisticated and Naive Offenders," CESifo Working Paper Series 7106, CESifo.

    More about this item

    Keywords

    crime; cheap talk; law enforcement; imperfect information;

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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