We conducted an experiment in which subjects played a sender-receiver game with and without rewarding opportunities. We find that rewards enhance the receiver's propensity to trust the sender's message but do not influence the sender's probability to tell the truth. Moreover, subjects who reward...

Assuming that the willingness to find a potentially innocent defendant guilty is decreasing in punishments, we derive two results: Deterrence is decreasing when punishments are too high, and deterrence maximizing punishments tend to increase in the quality of legal systems.