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...

A restricted-perceptions equilibrium exists in which risk-averse agents believe stock prices follow a random walk with a conditional variance that is self-fulfilling. When agents estimate risk, bubbles and crashes arise. These effects are stronger when agents allow for ARCH in excess returns.

We analyze a strategic trading model where an overconfident insider is required to publicly disclose his trades after the fact. We find the more confident insider is more concerned about the effect the initial trading has on the future.

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...

Using a novel dataset on 2012 tax inspections by the Hellenic Ministry of Finance in tourist and high economic activity areas in 13 regions in Greece we find significant evidence that the intensification of tax audits can induce tax compliance.

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.

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.

We study dishonesty in an individual task experiment. In contrast to the existing literature, we collect participant level data. We find that men are not only more likely to be dishonest than women, they are also more dishonest.

This paper examines the determinants of corruption in transition economies. We found that the progress of structural reform, comprising marketization, rule of law, and democratization had a crucial impact on the extent of corruption control in former socialist countries.

The paper investigates the influence of path dependence on corruption in Russian regions. We show that even twenty years after the collapse of the USSR, regions with a higher share of Communist Party members in the 1970s have substantially higher corruption.