Penalty Structures and Deterrence in a Two‐stage Model: Experimental Evidence

Anderson, Lisa R.; DeAngelo, Gregory; Emons, Winand; Freeborn, Beth A.; Lang, Hannes

doi:10.1111/ecin.12464

Cited by 13 publications

(8 citation statements)

References 70 publications

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“…The Basel Committee on Banking Supervision provided international banking regulation standards, the so-called Basel III standards, for banks managing their risks as well as monitoring techniques that should be implemented in a global setting. 4 1 See, for example, Taskinsoy [50], who analyses the possible causes of different financial and economic crises. 2 See, for instance, Köster and Pelster [31], who analyse financial penalties for banks based on a database of 671 financial sanctions on 68 banks between 2007 and 2014.…”

Section: Introductionmentioning

confidence: 99%

Gambling bank behaviour, incentive mechanism, and sanctions: A two-stage model

Strecker

2023

J Bank Regul

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This article analyses the optimal punishment structure set by a regulator in banking markets under asymmetric information. Relying on a theoretical model, we analyse whether a decreasing, constant, or increasing sanction scheme deters potentially repeated offences in banking. We find that an increasing punishment structure is efficient in reducing gambling bank behaviour. This holds if and only if the regulator’s detection probability is low or the amount gambled by the bank, if it would cheat, is high. With this paper, we provide justification for the current policy practice.

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Section: Introductionmentioning

confidence: 99%

Gambling bank behaviour, incentive mechanism, and sanctions: A two-stage model

Strecker

2023

J Bank Regul

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“…Against the literature in favor of escalating penalty schemes, Anderson et al . () claim that multi‐period models generally find that the optimal penalty structure is either flat or declining. A prominent study by Burnovski and Safra () argues that decreasing sanctions might be efficient in a n‐period setting if the number of offenses is chosen ex ante.…”

Section: Introductionmentioning

confidence: 99%

Sanctions for repeat offenders: a question of wealth?

Eggert

Minter

Stephan

et al. 2017

Scottish J Political Eco

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In a two‐period standard law‐enforcement model, individuals observe or break the law. In addition, individuals may offend accidentally. When sanctions are limited by individual wealth constraints, the government chooses appropriate sanctions for first and repeat offenders and the level of monitoring. We assume a welfare‐oriented government and derive subgame‐perfect equilibria for constant, increasing and decreasing sanctions depending on the individual wealth level.

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“… 36 For papers challenging Becker’s conclusion regarding risk attitudes, see Anderson et al. ( 2017 ) and Mungan ( 2017a ). …”

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confidence: 99%

Crime and punishment in times of pandemics

Sarel

2021

Eur J Law Econ

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How should we think about crime deterrence in times of pandemics? The economic analysis of crime tells us that potential offenders will compare the costs and the benefits from crime and from innocence and then choose whichever option is more profitable. We must therefore ask ourselves how this comparison is affected by the outbreak of a pandemic and the policy changes which may accompany it, such as governmental restrictions, social distancing, and responses to economic crises. Using insights from law and economics, this paper investigates how the various components in the cost-benefit analysis of crime might change during a pandemic, focusing on Covid-19 as a test case. Building on classical theoretical models, existing empirical evidence, and behavioral aspects, the analysis reveals that there are many potentially countervailing effects on crime deterrence. The paper thus highlights the need to carefully consider which aspects are applicable given the circumstances of the pandemic, as whether crime deterrence will increase or decrease should depend on the strength of the effects at play.

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Penalty Structures and Deterrence in a Two‐stage Model: Experimental Evidence

Cited by 13 publications

References 70 publications

Gambling bank behaviour, incentive mechanism, and sanctions: A two-stage model

Gambling bank behaviour, incentive mechanism, and sanctions: A two-stage model

Sanctions for repeat offenders: a question of wealth?

Crime and punishment in times of pandemics

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