By David Hyman | Mohammad H. Rahmati

Crime doesn’t pay. Or does it? We study the role of expectations regarding sanctions and the likelihood of detection on whether people obey the law. We examine how expectations influence whether people obey the law and conduct simulations of various enforcement counter-factuals. We find the average assessment of the likelihood of detection is quite accurate, but those who (mistakenly) believe the probability is lower than it is are much more likely to break the law. Further, expectations with regard to the likely consequences of getting caught are also heterogeneous. In our simulations, perceived fines have little impact on willingness to break the law, but a higher perceived likelihood of apprehension has an appreciable impact. Because marginal respondents are pivotal in the rate of law-breaking, debiasing expectations among the whole population has little impact.

Unpublished paper, 2024.