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Cited by 1Merger and Competition AnalysisExperimental Behavioral Economics StudiesLaw, Economics, and Judicial Systems

Trust, Leniency, and Deterrence

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Bigoni, M., Fridolfsson, S.-O., Le Coq, C., Spagnolo, G.·2015·Journal of Law, Economics, and Organization
DOI 10.1093/jleo/ewv006
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Abstract

This article presents results from a laboratory experiment studying the channels through which different law enforcement strategies deter cartel formation. With leniency policies offering immunity to the first reporting party, a high fine is the main determinant of deterrence, having a strong effect even when the probability of exogenous detection is zero. Deterrence appears to be mainly driven by “distrust”; here, the fear of partners deviating and reporting. Absent leniency, the probability of detection and the expected fine matter more, and low fines are exploited to punish defections. The results appear relevant to several other forms of crimes that share cartels’ strategic features, including corruption and financial fraud. ( JEL C92, D03, K21, K42, L41.)

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  • Five studies test policies guaranteeing impunity to officials or citizens who report corrupt practices on collusive bribery and extortionary bribery.

    “Five studies test the effect of policies guaranteeing impunity to officials or citizens who report corrupt practices (principal witness/leniency treatment/asymmetric liability) on collusive bribery (Abbink & Wu, 2017; Bigoni et al., 2015; Engel et al., 2016; Christofl et al. 2017; Buckenmaier et al., 2018), and extortionary bribery (Abbink et al., 2014).”

    From Public sector reforms and their impact on the level of corruption: A systematic review (2021) · cites this paper as Bigoni et al., 2015

    The Abstract (p. 2) describes a laboratory test of leniency offering immunity to the first party reporting, but the conduct tested was cartel formation, not collusive bribery. It names corruption only as a potentially analogous crime. Thus the citation supports the policy-testing aspect, not the claim that this study tested bribery. (LLM, conf=0.88)

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  • In some cases, leniency policies reduce collusive bribery but at the cost of making bribery more profitable for bidders.

    “In some cases, leniency policies reduce collusive bribery (Bigoni et al., 2015; Buckenmaier et al., 2018) but at the cost of making bribery more profitable for bidders (Christofl et al. 2017).”

    From Public sector reforms and their impact on the level of corruption: A systematic review (2021) · cites this paper as Bigoni et al., 2015

    The Conclusion (p. 21) reports that leniency increased deterrence of cartel formation in a laboratory experiment. It does not report a finding about collusive bribery specifically, though the paper suggests its results may be relevant to corruption. The claim about bidders’ profitability is attributed to Christofl et al., not to this source. (LLM, conf=0.86)

    Experimental — accuracy not yet measured

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Cites

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Cited by

Sorted by citations

Authors
Bigoni, M., Fridolfsson, S.-O., Le Coq, C., & Spagnolo, G.
Affiliations
  • University of Bologna (IT)
  • Research Institute of Industrial Economics (SE)
  • University of Rome Tor Vergata (IT)
ORCID
Venue
Journal of Law, Economics, and Organization
Publisher
Oxford University Press (OUP)
Published
2015-03-06
Volume
31
Issue
4
Pages
663-689
ISSN
  • 1465-7341 (ISSN-L)
  • 8756-6222
DOI
10.1093/jleo/ewv006
OpenAlex
W3124420026
Cited by
0
References
1
FWCI
0.00
Type
journal article
Language
en
Open access
Licence
cc-by-nc-nd
Locations
  • The Journal of Law Economics and Organization (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
  • Archivio istituzionale della ricerca (Alma Mater Studiorum Università di Bologna) (submittedVersion, cc-by-nc-nd)
Topics
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Merger and Competition Analysis
  • Social Sciences › Safety Research › Experimental Behavioral Economics Studies
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Law, Economics, and Judicial Systems
Keywords
cartel formation, leniency programs, deterrence, law enforcement strategy, distrust, reporting behavior, fines, detection probability, corruption, financial fraud

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