CrimProf Blog

Editor: Kevin Cole
Univ. of San Diego School of Law

Saturday, June 1, 2013

Engel on Deterrence by Imperfect Sanctions

Christoph Engel (Max Planck Institute for Research on Collective Goods) has posted Deterrence by Imperfect Sanctions – A Public Good Experiment on SSRN. Here is the abstract:

Sanctions are often so weak that a money maximizing individual would not be deterred. In this paper I show that they may nonetheless serve a forward looking purpose if sufficiently many individuals are averse against advantageous inequity. Using the Fehr/Schmidt model (QJE 1999) I define three alternative channels: (a) identical preferences are common knowledge, but inequity is not pronounced enough to sustain cooperation; (b) heterogeneous preferences are common knowledge; (c) there is preference uncertainty. In a linear public good with punishment meted out by a disinterested participant, I test two implications of the model: (a) participants increase contributions in reaction to imperfect punishment; (b) imperfect punishment helps sustain cooperation if participants experience free-riding.

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