Escalating Penalties and Imperfect Information

Or search all bepress web pages:

We welcome your feedback. Please email your suggestions and ideas to us.

German Working Papers in Law and Economics

AUTHOR:
Tim Friehe

TITLE:
Escalating Penalties and Imperfect Information

SUGGESTED CITATION:
Tim Friehe (2006) "Escalating Penalties and Imperfect Information", German Working Papers in Law and Economics: Vol. 2006: Article 3.
http://www.bepress.com/gwp/default/vol2006/iss1/art3

View the article (282 K)

Notify a colleague about this paper

Get Acrobat Reader

Printing Tip: Select the option to 'print as image' in the Acrobat print dialog to ensure the article prints as it appears on screen.
Learn more...

ABSTRACT:
We show that imperfect information of potential oenders concerning the magnitude of enforcement variables can reason escalating penalties welfare maximizing in two dfferent variants of the optimal-deterrence model. Imperfect information causes distortions in indi- viduals' perception of the enforcement variables that apply to the expected sanction of the first offense. Once detected, individuals learn about enforcement variables which makes this argument less relevant for the expected sanction for consecutive offenses.