Criminal Deterrence: Some Initial Experimental Results

Abstract

A universal problem that exists in society is finding an optimal punishment that will deter individuals from a certain unwanted behavior. Sociologists, psychologists, economists and even businessmen have grappled with the problem of maximizing deterrence. The problem of eliminating unwanted behavior occurs across disciplines. In management, for example, it arises in the form of the agency problem. In this setting management desires optimal output from its workers. The workers are then faced with maximizing their own utility or happiness���� and therefore have the temptation to shirk some of their responsibilities. Management responds to this by monitoring the workers activities. The question is how much monitoring and what penalty is needed to optimally deter shirking? Given that monitoring is a costly activity is low monitoring and a high penalty a sufficient deterrent���� or would a higher probability of catching shirkers be worth the expense?(see Arrow(1985) and Grossman & Hart(1983) for further detail on the agency problem.) The problem is identical when using a law enforcement framework. Law enforcement departments are faced with the problem of maximizing their deterrent capability given certain budget restrictions. In this case the pertinent question is���� will the public���� in general be more deterred by a large fine or by a high probability of getting caught? The object of this research is to optimize the level of costly enforcement. This paper is divided into six sections. Section one discusses the economic theory pertinent to the deterrent question as well as predictions implicit in economic theory regarding individual behavior. Section two gives the psychological and sociological perspectives concerning deterrence, and defines their respective predictions on whether the probability of getting caught or the magnitude of the fine plays the more significant role in deterrence. The third section gives two distinct ways of modelling criminal activities and the relevent research that has been conducted in those two areas. Section three also discusses the limitations inherent in economic experiments and the shortcomings specific to this experiment. Section four then explains the basic experimental design and discusses the logic of the experiment. The results of the experiment and their implications are reported in section five, with section six being reserved for concluding remarks as well as direction for further research.