Hard Labour in the lab: Are monetary and non-monetary sanctions really substitutable?

James Tremewan, Matteo Rizzolli

The theory of optimal deterrence suggests the substitution of monetary sanctions over non-monetary sanctions whenever this is possible
because non-monetary sanctions are more socially costly. This prescription is based on the assumption that monetary and non-monetary
sanctions are perfect substitutes: there exists a monetary equivalent
of a non-monetary sanction that, if used as a fine, produces the same
level of deterrence. We test this assumption with an experiment. In
our stealing game potential thieves face the possibility of punishment.
Our non-monetary sanction treatments mimic hard labour: we require
convicted individuals to carry out a tedious real effort task. In the
monetary treatments sanctions are instead fines, which are based on
individuals' willingness to pay to avoid the effort task to ensure comparability to the non-monetary treatment. A second manipulation of our experiment concerns the balance of errors in the adjudication procedure (convictions of innocents and acquittal of guilty individuals). We find that stealing is reduced most effectively by a sanction regime that combines non-monetary sanctions with a severe procedure. Our data is consistent with the notion that both monetary punishment and pro-defendant sanction regimes are less effective in communicating moral condemnation of an act.

Department of Economics
External organisation(s)
Libera Università Maria Ss. Assunta
No. of pages
Publication date
Austrian Fields of Science 2012
502021 Microeconomics
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