Compliance, Repeat Offenses, and Strategic Enforcement

20 Pages Posted: 19 Apr 2006 Last revised: 29 Sep 2011

Date Written: March 7, 2006

Abstract

The literature on the optimal enforcement of law considers a regulator determining both the sanction placed on a caught offender as well as a selection of a probability of apprehension. This approach originated by Becker (1968) leads to two results that do not match observation. First, since the marginal cost to the sanction is zero while there is a substantial cost to enforcement one should expect full compliance with a law using maximal sanctions and minimal enforcement. Second, both sanctions and the probability of apprehension increase with repeated violations. The inverse relationship between the two predicted from Becker's analysis contradicts this observation. Here I present both a rationale for the lack of full compliance as well as the relationship between increasing sanctions and increasing apprehension with repeat offenses. The literature on optimal enforcement considers only the population's response to the enforcement. By considering the enforcement official's response to the frequency of violations the strategic interactions of the players in a game is considered. In such a game the probability of apprehension arises from the mixed strategies in the game. I show that full compliance is not an equilibrium regardless of the magnitude of the sanction. If no individual violates the law then it would no longer be best for the enforcement official to expend the resources to induce full compliance. Furthermore, in a dynamic game the rate of apprehension is greater for a second offense than a first time conviction. If the population differs in its gain from breaking the law then those with a greater benefit to the violation are ex ante more likely to break it. As a result, the enforcement official must target them more so that in equilibrium they offend at the same rate as the others. As a consequence, disproportionately more of those caught breaking the law are those targeted in the enforcement. Therefore, a greater proportion of one-time violators will be caught with a second offense than those with no convictions are caught for a first offense. This result holds for any magnitude of the sanction and even holds for schedules that increase in severity with the number of prior convictions.

Keywords: compliance, enforcement, law, repeat offenses

JEL Classification: K49, L51

Suggested Citation

McCannon, Bryan C., Compliance, Repeat Offenses, and Strategic Enforcement (March 7, 2006). Available at SSRN: https://ssrn.com/abstract=896933 or http://dx.doi.org/10.2139/ssrn.896933

Bryan C. McCannon (Contact Author)

Illinois Wesleyan University ( email )

P.O. Box 2900
Bloomington, IL 61702-2900
United States

HOME PAGE: http://sites.google.com/site/bryancmccannon

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