Reputational versus Beckerian Sanctions

Document Type

Article

Publication Date

1-2022

Journal Title

American Law and Economics Review

ISSN

1465-7252

DOI

10.1093/aler/ahab016

Abstract

Legal sanctions cause reputational losses in addition to the direct losses. Lowering the probability of punishment reduces these reputational losses by diluting the informational value of verdicts. These considerations better align the positive as well as normative implications of law enforcement models with intuition and empirics: violations of the law are more responsive to the certainty rather than the severity of punishment even absent risk-seeking offenders (positive), which causes extreme Beckerian punishments to be inefficient when sanctions are socially costly to impose (normative). Moreover, in some cases optimal enforcement is “anti-Beckerian”: punishment is symbolic, and detection costs are incurred solely to provide reputational incentives.

First Page

247

Last Page

277

Num Pages

31

Volume Number

24

Issue Number

1

Publisher

American Law and Economics Association

Link to Full Text

SSRN

Share

COinS