The relative effectiveness of punishment severity and risk of apprehension in deterring dishonest behavior: Experimental results from a developing country

Abstract

For many types of wrongdoings, a deterrent may be a more desirable goal than punishment due to the damage these wrongdoings have already caused and the strain on the resources of enforcement authorities. This paper uses economic experiments to offer insights into the relative effectiveness of monitoring (increasing the risk of apprehension) and punishment severity in deterring dishonest behavior. Experimental results show that varying the degree of punishment severity does not alter self-reported scores on a 5-minute quiz, an indicator of dishonest behavior, given a low risk of apprehension. On the other hand, at a seemingly light punishment level (no gain received), higher risks of apprehension are associated with lower levels of dishonest behavior as seen from lower self-reported quiz scores. These results suggest that the current approach to deterring wrongdoings that usually involve threats of more severe punishment may not be achieving the desired outcome.