2015

Trust, Leniency and Deterrence

Reprint No. 2015:62

Author(s): Maria Bigoni, Sven-Olof Fridolfsson, Chloé Le Coq and Giancarlo SpagnoloYear: 2015 Title: Journal of Law, Economics and Organization Volume (No.): 31 (4) Pages: 663–689
Online article (restrictions may apply)
Preliminary version


This article presents results from a laboratory experiment studying the channels through which different law enforcement strategies deter cartel formation. With leniency policies offering immunity to the first reporting party, a high fine is the main determinant of deterrence, having a strong effect even when the probability of exogenous detection is zero. Deterrence appears to be mainly driven by “distrust”; here, the fear of partners deviating and reporting. Absent leniency, the probability of detection and the expected fine matter more, and low fines are exploited to punish defections. The results appear relevant to several other forms of crimes that share cartels’ strategic features, including corruption and financial fraud.


Reference:
Bigoni, Maria, Sven-Olof Fridolfsson, Chloé Le Coq and Giancarlo Spagnolo (2015), "Trust, Leniency and Deterrence ". Journal of Law, Economics and Organization 31(4), 663–689.

Elgar Companion to

Social Capital and Health

Martin Ljunge okt 2018.jpg

Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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