Optimal Sanctions When the Probability of Apprehension Varies Among Individuals
NBER Working Paper No. 4078
This paper explores how optimal enforcement is affected by the fact that not all individuals are equally easy to apprehend. When the probability of apprehension is the same for all individuals, optimal sanctions will be maximal: as Gary Becker (1968) suggested, raising sanctions and reducing the probability of apprehension saves enforcement resources. This argument necessarily holds only when the enforcement authority knows how difficult an individual will be to apprehend before expending any investigative resources. When differences among individuals exist and can be observed only after apprehension, or not at all, optimal enforcement may involve less than maximal sanctions.
Document Object Identifier (DOI): 10.3386/w4078
Published: "Optimal Sanctions and Differences in Individuals' Likelihood of Avoiding Detecion," International Review of Law and Economics, vol. 13, pp 217-224 (1993)