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Cheap talk about the detection probability

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  • Baumann, Florian
  • Friehe, Tim

Abstract

This paper analyzes whether the behavior of potential offenders can be guided by information on the actual detection probability transmitted by the policy maker. It is established that, when viewed as a cheap-talk game, the existence of equilibria with information transmission depends on the level of the sanction, the level of costs related to imposing the sanction, and the level of social harm resulting from the offense. In addition, we find that the policy maker (i.e., society as a whole) is not necessarily better off ex ante when more information is transmitted in equilibrium, but that potential offenders always are.

Suggested Citation

  • Baumann, Florian & Friehe, Tim, 2013. "Cheap talk about the detection probability," DICE Discussion Papers 90, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
    • Handle: RePEc:zbw:dicedp:90
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    References listed on IDEAS

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    Cited by:

    1. Zenou, Yves & Sommer, Marc, 2019. "Imperfect Information, Social Norms, and Beliefs in Networks," CEPR Discussion Papers 14087, C.E.P.R. Discussion Papers.
    2. Buechel, Berno & Feess, Eberhard & Muehlheusser, Gerd, 2020. "Optimal law enforcement with sophisticated and naïve offenders," Journal of Economic Behavior & Organization, Elsevier, vol. 177(C), pages 836-857.

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    More about this item

    Keywords

    crime; cheap talk; law enforcement; imperfect information;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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