Sanction Severity Influences Learning About Enforcement Policy : Experimental Evidence

The literature on law enforcement often assumes that the updating of beliefs regarding the probability of detection is a process that is independent from the severity of the sanction. We test this presumption experimentally, using a taking game in which the probability of detection may be either high or low according to commonly known priors. Individuals gain information regarding their detection probability from their detection experience in the taking game. Some offenders are punished by a severe sanction, while others are sanctioned only mildly, which causes the detection experience to differ across subjects. Our analysis reveals that the sanction severity influences how individuals update their beliefs about the detection probability, casting doubt on the widely-held presumption that the perceived detection probability and the sanction magnitude are separable