Monetary sanctions are less effective when agents cannot afford to pay them in full. We present a simple model of a society with two types of risk averse agents, differing in terms of productivity in the legal labor market. We consider transfers from the most productive to the least productive...

This paper studies through an agency model the problem of concealing an illegal activity which benefits the principal. The agent can exert an effort that negatively affects the likelihood of detection. We model such behavior with the assumption that the principal is risk neutral while the agent...