When penalties for first-time offenders are restricted, it is typically optimal for the lawmaker to overdeter repeat offenders. First-time offenders are then deterred not only by the (restricted) fine for a first offense, but also by the prospect of a large fine for a subsequent offense. Now...

Do corrupt people self select themselves in professions where the scope of corruption is high? We conduct a corruption experiment with private sector job aspirants and aspirants of Indian bureaucracy. The game models embezzlement of resources in which “supervisors” evaluate the performance...

We conduct a field experiment on tax compliance, focusing on newly founded firms. As a novelty the effect of tax authorities’ supervision on timely tax payments is examined. Interestingly, results show no positive overall effect of close supervision on tax compliance.

Legal enforcement of bans on goods can reduce the size of the black market but lead to greater violence by increasing revenue in the illicit market. However, the link between enforcement and violence is not as simple as is suggested by the textbook model, even for a competitive market....

Marginal deterrence concerns the incentives created by criminal penalties for offenders to refrain from committing more harmful acts. We show that when offenders act sequentially, it is often optimal for the level of the sanction, not just the expected sanction, to rise with the severity of the...

One can restructure institutions, but if individual-level motivations for corrupt behavior are not understood, these restructuring may not be effective. We introduce an evolutionary-game modeling to deal with the problem of corruption driven by imitative behavior.

I present a simple model of collusion in which the competition authority offers leniency rates contingent on the number of firms that report information. The optimal leniency policy involves what I refer to as a single informant rule—that is, leniency should be given only when a single firm...

This paper considers the effect of agrarian reforms on rioting in India. I find that the adoption of agrarian reforms was associated with a decline in the overall riot rate but the Hindu–Muslim riot rate, an urban phenomenon was largely unaffected by the program.

There is a long and detailed history of attempts to understand what causes crime. One of the most prominent strands of this literature has sought to better understand the relationship between economic conditions and crime. An economic argument is that in an attempt to maintain consumption in the...

This study employs state-level panel data to examine the effect of income inequality on crime in the United States. Using panel cointegration techniques, we find a significant negative effect of inequality on crime.