Working Paper: CEPR ID: DP5899
Authors: Nuno Garoupa; Marie Obidzinski
Abstract: The harm caused by many acts is not certain but probabilistic. Current public enforcement of the law combines harm-based sanctions (usually in criminal law) with act-based sanctions (very common in administrative law and regulation). We propose an economic theory of the choice between harm-based and act-based sanctions in public enforcement. The efficiency of act-based versus harm-based sanctions is analyzed and a typology of the determinants is drawn up. In the simple model with risk neutral offenders, both legal policies have the same deterrent level, but act-based sanctions end up punishing more people and the sanctions are lower. However when the assessment of the probability of harm diverges across individuals, the choice between harm-based or act-based sanctions depends on whether it is the enforcer or the average individual who is better informed. Legal policy implications are discussed.
Keywords: act-based sanction; harm-based sanction; uncertain harm
JEL Codes: K4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Type of sanction (harm-based vs. act-based) (K40) | Level of deterrence (K49) |
| Type of sanction (act-based) (K40) | Number of individuals punished (K40) |
| Information asymmetry (enforcer vs. individual) (D82) | Choice of sanction type (K40) |